The Republic of the Philippines Preparatory Survey on ... · The Republic of the Philippines The...

The Republic of the Philippines

The Republic of the PhilippinesPreparatory Survey on

Ambulatory Surgical Center and HospitalDevelopment Project

(PPP Infrastructure Project) Final Report

February 2015

Japan International Cooperation Agency (JICA)

Mitsubishi CorporationAzusa Sekkei Co., Ltd.

PricewaterhouseCoopers Co., Ltd.OS

JR（先）

15-013

Ambulatory Surgical Center and Hospital Development Project in the Republic of the Philippines (PPP Infrastructure Project)Final Report

Table of Contents

Part1: NEEDS AND BACKGROUND OF THE PROJECT..................................................... 6Chapter 1-1 Analysis of current situations ................................................................................. 6

1.1.1 Background and objectives of the project ..................................................................... 61.1.2 Environment of the Philippines................................................................................... 101.1.3 Current situation and challenges of the health sector in the country .......................... 251.1.4 Laws and Regulations ................................................................................................ 46

Chapter 1-2 Analysis of market conditions .............................................................................. 641.2.1 Trends in the relevant policies, plans, budget/source of funds.................................... 641.2.2 Infrastructures.............................................................................................................. 741.2.3 Projects position within the partner country’s policy such as its development plan... 741.2.4 Foreign Initiatives ....................................................................................................... 75


List of Figures and Tables

Figure 1.1.1 Map of the Philippines..................................................................................... 12Figure 1.1.2 Historical Monthly Rainfall and Temperature in the Philippines .................... 13Figure 1.1.3 Philippines Population ..................................................................................... 14Table 1.1.1 Number of Licensed Government and Private Medical Institutions in thePhilippines............................................................................................................................ 15Table 1.1.2 Estimated population of the cities in NCR 1990-2010...................................... 16Table 1.1.3 Foreign Trade of the Philippines from 1994 to 2013 ........................................ 18Table 1.1.4 Annual GDP Growth Rate of the Philippines.................................................... 19Table 1.1.5 Historical GDP Growth Rates by Countries...................................................... 19Table 1.1.6 Historical Trend of Growth Rates per Industry ................................................. 20Table 1.1.7 Total Approved Investments of Foreign and Filipino Nationals by Industry (inmillion PHP)......................................................................................................................... 20Table 1.1.8 Philippine Economic Indicators (2014)............................................................. 21Table 1.1.9 Consumer Price Index (CPI) For All Income Households........................ 23Table 1.1.10 Headline Inflation Rates in the Philippines ..................................................... 24Table 1.1.11 Exchange rate of USD to PHP in past 20 years............................................... 24Table 1.1.12 Exchange rate of JPY to PHP in past 20 years ................................................ 25Table 1.1.13 Top 10 Leading Causes of Mortality ............................................................... 26Table 1.1.14 Top 10 Leading Causes of Morbidity .............................................................. 26Table 1.1.15 Maternal Mortality in the Philippines ............................................................. 27Table 1.1.16 Child Mortality in the Philippines ................................................................... 27Figure 1.1.4 Total Health Expenditure and its Rate of Increase........................................... 28Figure 1.1.5 Source of Funds for Total Health Expenditure ................................................ 29Table 1.1.17 Comparison of Beds per 1000 Population in ASEAN Countries .................... 29Figure 1.1.6 Trend in the Number of Private and Public Hospitals ..................................... 30Figure 1.1.7 Trend in the Total Number of Hospitals and Beds per 10,000 Populations..... 30Figure 1.1.8 Number of Hospitals by Size of Bed（2007） ............................................... 31Table 1.1.18 Hospital Category and Levels under A.O.2005-0029 ..................................... 31Table 1.1.19 New Classification of Hospitals and Other Health Facilities underA.O.2012-0012..................................................................................................................... 32Table 1.1.20 New Classification of General Hospitals under A.O.2012-0012 .................... 32Table 1.1.21 Reclassification of PhilHealth Institutional Health Care Provider underPhilHealth Circular s.2013-0014.......................................................................................... 33Table 1.1.22 Number of Licensed Government and Private General and Specialty Hospitals


in the Philippines 2013......................................................................................................... 36Table 1.1.23 Total Enrollment by Sector per year (in million) ............................................ 40Table 1.1.24 Corporate Operating Budget CY 2013 ............................................................ 42Table 1.1.25 PhilHealth Premium Contribution Table (in PHP) .......................................... 44Table 1.1.26 Examples of Hospital related regulations under National Building Code of thePhilippines (P.D. 1096)......................................................................................................... 47Table 1.1.27 Excerpts of Hospital related regulations stipulated in the Implementing Rulesand Regulations (IRR) of Revised Fire Code of the Philippines 2008 (RA 9514) .............. 49Table 1.1.28 Examples of Hospital Related Regulations under Code on Sanitation, PD856

52Table 1.1.29 Major Regulations on Hospital Operations under The National HealthInsurance Act of 2013 (RA10606) ....................................................................................... 53Table 1.1.30 Major Regulations on Hospital Operations under Revised Rules andRegulations of The National Health Insurance Act of 2013 ................................................ 56Table 1.1.31 Obligation of Employers under Rule 1960 of Occupational Safety and HealthStandards .............................................................................................................................. 57Table 1.1.32 Types of companies in the Philippines ............................................................ 60Table 1.2.1 Trend in annual revenue of the Government in past 5 years ............................. 64Table 1.2.2 Trend in Annual Budget of the Government by Sector ..................................... 65Table 1.2.3 2013 Budget of the Government by Sector (Top 10 Departments)................... 66Table 1.2.4 Annual Debt-to GDP Ratio................................................................................ 67Table 1.2.5 DOH Programs According to the Five KRA’s of the Social Contract and theKalusugan Pangkalahatan (Universal Health Care) ............................................................. 68Table 1.2.6 Health Expenditure by Source of Fund, 2005-2011 (in million pesos)............. 71Table 1.2.7 Health Sector Budget Allocation Breakdown per year...................................... 72Table 1.2.8 Budget Allocation by Department（2013-2014）............................................ 73Table 1.2.9 PPP projects in healthcare sector....................................................................... 74Table 1.2.10 Foreign funded health sector projects (in PHP) .............................................. 75


LIST OF ABBREVIATIONSAAB Authorized Agent Bank

ADB Asian Development Bank

AHA the Aquino Health Agenda

AHMOPI the Association of Health Maintenance Organizations of the Philippines

ASC Ambulatory Surgical Center

ASEAN Association of South‐East Asian Nations

AZ Azusa-Sekkei

BHFS Bureau of Health Facilities and Services

BHS Basic Healthcare Services

BIR Bureau of Internal Revenue

BoC Bureau of Customs

BOD Biochemical Oxygen Demand

BPLO Business Permit and Licensing Office

BSP Central Bank of the Philippines

BTr Bureau of the Treasury

CBD Central Business District

CCO Chemical Control Orders

CEO Chief Executive Officer

CF Cash Flow

CFA Construction Floor Area

CHD Center for Health Development

CHT Community Health Team

CON Certificate of Need

COR Certificate of Registration

CPI Consumer Price Index

CTC Community tax certificate

CTO City Treasurer's Office


DA Department of Agriculture

DAO DENR Administrative Order

DENR Department of Environment and Natural Resources

DepEd Department of Education

DILG Department of Interior and Local Government

DND Department of National Defense

DOF Department of Finance

DOH Department of Health

DOTC Department of Transportation and Communications

DOTS the Directly Observed Treatment Shortcourse

DPWH Department of Public Works and Highways

DSG Design Standards and Guidelines

DST Documentary Stamp Taxes

DSWD Department of Social Welfare and Development

EBITDA Earnings Before Interest, Tax, Depreciation and Amortization

ECA Environmentally critical areas

ECC Employees Compensation Commission

ECC Environmental Compliance Certificate

ECP Environmentally Critical Projects

NPO Non-Profit Organization

EIS Environmental Impact Statement

EMB The Environmental Management Bureau

EMS Electronics Manufacturing Services

EPC Engineering, Procurement and Construction.

EPRMP Environmental Performance Report and Management Plan

ESR Event-based Surveillance and Response

GAIA Global Alliance on Anti-Incinerators

GDP Gross Domestic Product

GEF Global Environmental Funds


GLA Gross Leasable Area

GLO Globe telecom Inc.

HC Healthcare

HCWH Healthcare without Ham

HFEP Health Facility Enhancement Program

HMO Health Maintenance Organizations

ICU Intensive Care Unit

IDs Individual Doctors

IEE Initial Environmental Examination

IP Interest Payments

JICA Japan International Cooperation Agency

KP Kalusugan Pangkalahatan

KPI Key Performance Indicators

KRA Key Result Areas

LGC Local Government Code

LGU Local Government Units

LRT Light Rail Transit

LTO License to Operate

MC Memorandum Circular

MC Mitsubishi-Corporation

MCH Maternal Child Healthcare

MERALCO Manila Electric-Railway and Light Co.,

MMDA Metro Manila Development Authority

MRF Materials Recovery Facility

NCR National Capital Region

NG the National Government

NGOs Non-Governmental Organizations

NHIP the National Health Insurance Program

NSO the Philippines National Statistics Office


O&M Operation and Maintenance

ODA Official Development Assistance

OEM Original Equipment Manufacturers

OSS One-Stop Shop

OY Operational Year

PCAHO Philippine Council on the Accreditation of Healthcare Organizations

PCD Printer's Certificate of Delivery

PCO Pollution Control Officer

PD Presidential Decree

PD Project Description

PEIS Programmatic Environmental Impact Statement

PEISS Philippine Environmental Impact Statement System

PEPRMP Programmatic Environmental Performance Report and Management Plan

PHIC the Philippine Health Insurance Corporation

PNR Philippine National Railways

POC Pollution Control Officer

PPP Public Private Partnership

PSIF Private Sector Investment-Finance

PTC Permit to Construct

PwC PricewaterhouseCoopers

PWDs Persons With Disabilities

RA Republic Act

RGM Rapid Growth Markets

RHU Rural Health Unit

RVU Relative Value Unit

SATS Semiconductor assembly and test services

SEC Securities and Exchange Commission

SHA Share Holders Agreement

SPC Special Purpose Company


SPEED Surveillance in Post Extreme Emergencies and Disasters

SSS Social Security System

STP Sewage Treatment Plant

TCT Transfer Certificate of Title

TIN Taxpayer Identification Number

TSP Total Suspended Particulates

UN United Nations Special Division

UNDP United Nations Development Program

UPMI the University Physicians Medical Center

VAT Value Added Tax

WACC Weighted Average Cost of Capital

WHO World Health Organization


6

Part1: NEEDS AND BACKGROUND OF THE PROJECT

Chapter 1-1 Analysis of current situations

1.1.1 Background and objectives of the project

1.1.1.1 Objective of the Project

This project aims to provide affordable and efficient healthcare services to the growingmiddle class. The project under this report aims to support the development, constructionand operation of the selected two hospitals in Metro Manila

1.1.1.2 Rationale for the Use of Private Sector Investment Finance

JICA’s PSIF is expected to be provided to the project. The rationale for the use of PSIF isthat 1) the goal of the project meets both Filipino and Japanese development andpartnership policies, and 2) building, operating and managing private hospitals, which areto provide more affordable and efficient healthcare services to the emerging middle class inrapidly growing Philippines, will be better done with Japanese know-how; JICA’s technicalassistance for medical and operational capacity development and the Study Team’s advisoryin construction, procurement and inventory control and business management. More detailsare shown below;

(1) Filipino and Japanese policies related to development and partnership

1) The Philippines

The Philippines developed the ‘Philippine Development Plan 2011-2016’, whose aimincludes the achievement of universal healthcare. The government has taken various actionssuch as the enactment of the Sin Tax Law and implementation of Health FacilityEnhancement Program (HFEP). However, the progress is still slow against the remainingchallenges such as high population growth, disparity in health service delivery andutilization, fragmentation in health financing and service delivery, etc. The country’s healthsystem remains underfunded, as DoH budget aiming for upgrading health facilities is notfully admitted1. Therefore, the government still needs to largely focus on the poor, while themiddle-class population is rapidly growing2, as the attainment of goals to realize affordable

1 For example, in 2011, Department of Budget and Management approved 1.4 billion pesos for DoH budget, one sventh of9.6 billion pesos DoH applied for upgrading health facilities of 66 hospitals.2 The middle-class population in the Philippines increased from 44% of the population in 1988 to 54% in 2006, which amounts to around 45


7

healthcare for all Filipino, the objective of National Health Insurance Act of 1995, has notbeen achieved3. Under these circumstances, the Filipino Government recognizes the privatesector as a partner especially “in pursuing development objectives” as declared in the 1987Constitution. The construction of hospitals by private sector has been also promoted sincethe improvement of social infrastructure is one of the most urgent issues raised in theDevelopment Plan. Also, Health Facility Enhancement Program (HFEP) includes bothpublic and private hospitals in its unified plan as bed to population ratio in the Philippinesis lagging behind compared to the ASEAN countries and this situation seems difficult to besolved only with the initiatives led by DoH and municipal governments.

2) Japan

One of the priority areas of the Country Assistance Policy for the Philippines, developed bythe Ministry of Foreign Affairs of Japan, is focused on ‘Overcoming Vulnerability andStabilizing bases for Human Life and Production Activity’, whose approach includes ‘thedevelopment of safety nets including healthcare’. The Japanese Government also states asone of its strategic goals “contribution utilizing Japan’s healthcare industry and itstechnology” under “International Healthcare Development Strategy” announced in June2013. It also should be noted that the Philippines is Japan’s important partners for economicdevelopment as the country’s location can serve as a hub of maritime activities of the EastAsian countries and it is achieving strong economic growth with the English speakingpopulation and abundant cheap and young labor force. The Philippines and Japanannounced a Joint Statement on the Comprehensive Promotion of the "StrategicPartnership" between Neighboring Countries Connected by Special Bonds of Friendship in2011. A number of Japanese companies have started business and are economically activein the Philippines.

(2) Development of private hospitals to serve growing middle class with Japanese know-how

The country’s health sector is a public-private mixed system with the private sectordominating the market’ and its private health expenditure is about 2.85% of GDP in 2012,which is approximately 65% more than that of the government4. Private hospitals’ facilities

million people. As the ADB's 47th Annual Meeting emphasized the importance of fostering the middle class for healthier economic growth.

3 Following the enactment of The National Health Insurance Act of 1995, a series of healthcare reform initiatives have beenintroduced to achieve Universal Health Care for all Filipinos, e.g. Health Sector Reform Agenda (HSRA) in 1999,FOURmula One for Health in 2006, and Aquino Health Agenda in 2010 by President Ninoy Aquino. Please refer to 1.1.3.6Medical Insurance Systems.4 http://www.wpro.who.int/health_services/service_delivery_profile_philippines.pdf


8

are generally perceived as better than public hospitals’5, and it is estimated that almost halfof the population who needed inpatient care was confined in private hospitals according tothe DOH6. It is important to note that non-poor families including the middle class are morelikely to use private facilities unlike poor families who rely more heavily on public ones7

(e.g. an estimation shows that 42% of the population went to private health facilities in20088).

However, even though the private hospitals are of great importance in order to serve theincreasing middle-class and wide range of diseases, and to deal with inpatient care andpatients who are referred to by public providers in need of specialized care or specialfacilities such as ICU9, it has been observed that the number of private hospitals decreasedfrom 1,194 in 1980 to 1,082 in 2010 (-9.4%)10 and the number of beds has been falling,too11.

Japanese know-how in construction and operation of hospital and technical assistance willenable the new hospitals to provide affordable care to a wider range of population, mainlythe emerging middle class who are the drivers of the Philippines’s development.

More detailed social and economic situation of the Philippines are given in the section 1.1.5onwards and Ch. 2.7.

1.1.1.3 PPP Feasibility Study

The JICA study team has conducted a Feasibility Study (hereinafter referred to as “F/S” orthe “Study”) to determine where the project is socially and economically viable, and todevelop a better project scheme in collaboration with the Filipino counterparts. The studyteam’s proposal aims to build a flagship hospital model for the Philippines by exportingJapanese healthcare services.

(1) Study Period

The Study has been conducted since June 2014 and is planned to be concluded in February

5 Same as above

6 http://dirp4.pids.gov.ph/ris/dps/pidsdps1105.pdf

7 Financing Health Care For Poor Filipinos. Working Paper Series No. 2004-8 (World Bank Working Paper); Solon, Orville, Quimbo, S. A.

and Panelo, C. I. A., 2003

8 http://www.wpro.who.int/asia_pacific_observatory/hits/series/phl_living_hits_2_5_2_health_facility_planning.pdf

9 http://www.wpro.who.int/health_services/service_delivery_profile_philippines.pdf

10 In 2004, mandatory Certificate of Need has been introduced for establishing new hospitals. As this regulation has startedto be recognized as an impediment for private hospital establishments, the regulation has been abolished for private hospitalsin 2013. This regulasion is thought to be a background for the decrease in the number of private hospitals.11 http://www.wpro.who.int/asia_pacific_observatory/hits/series/phl_living_hits_2_5_2_health_facility_planning.pdf


9

2015.

(2) Objective

The study has been conducted to develop a detailed business plan for the project, whichincludes demand forecast, business scope, cost estimation, financing structure,implementation schedule, construction method, organizational structure, O&M structure,socio-environmental impact and expected outcomes, and to provide JICA with necessaryinformation for the PSIF screening.

(3) Study Team Structure

The study has been conducted by a consortium composed of MC, Azusa Sekkei (hereinafterreferred to as “AZ”) and PricewaterhouseCoopers (hereinafter referred to as “PwC”). Theprofiles of each company are as follows;

1) Mitsubishi Corporation (MC): As a prospective investor, MC has been in charge ofbusiness planning and scheme development. MC is a global integrated business enterprisethat develops and operates businesses across various industries including environmentaland infrastructure, industrial finance, hospital development/management support and etc.

2) Azusa Sekkei (AZ): AZ has developed basic design, construction plan and moredetailed facility plan of the hospitals and provided cost estimates based on the operationplan. AZ has been engaged in a number of hospital construction projects and shared itsexpertise in about 40 other countries worldwide through Japan's ODA program.

3) PricewaterhouseCoopers (PwC): PwC's Public Private Partnership (hereinafter referredto as “PPP”) team and healthcare (hereinafter referred to as “HC”) team have jointlysupported MC for the business and scheme development. PPP team, with a great deal ofexperience in PPP/PFI (Private Finance Initiatives) market including hospital business andJICA projects as an exclusive financial advisor, has conducted legal, risk and financialanalysis and developed a cash flow model. HC team on the other hand has conductedsituation analysis and provided consulting services on hospital business. PwC is a globalfirm that provides industry-focused assurance, tax and advisory & consulting services to itsclients and their stakeholders, with member firm offices in 157 countries.

(4) Study Schedule

The schedule of the study and the report submission is as follows;

Year 2014 2015

Month 5 6 7 8 9 10 11 12 1 2

Development of base case


10

Development of specific businessplans

Examination for the expansion ofthe model business structure

Environmental and socialconsiderations

Reports▲

IC/R▲

IT/R ▲

DF/R▲

F/RSource: JICA Study Team

1.1.2 Environment of the Philippines

1.1.2.1 History of the Philippines

The history of the Philippines can be sub-divided into: (1) Pre-Spanish Rule, (2) SpanishColonial Rule, (3) American Rule, (4) The Philippine Republic, (5) Martial Law, and (6)Post-Martial Law to Present Time.

(1) Pre-Spanish Rule

The Austronesian-speaking people were the early inhabitants of majority of Southeast Asiaand Oceania. They include the ethnic groups of Philippines, Malaysia, Indonesia, Taiwan,and other countries in the region. The Philippine archipelago was believed to have beensettled at least 30,000 years ago. The basic communal unit was the barangay, which denoteda kinship group headed by a datu (chief). Prior to the Spanish colonization, the Philippinesalready had a thriving socio-economic system where they were trading with the Chineseand Japanese. Islam was introduced into the country by traders from the neighboringislands12.

(2)Spanish Colonial Rule

In 1521 Ferdinand Magellan arrived in the Philippines during his circumnavigation of theglobe, and in 1565 the Spanish established their first settlement in Cebu. In 1571, theSpanish set up their capital in Manila. During the Spanish colonial rule, Christianitybecame the dominant religion and trade centered around Galleon trading until 1815 whenthe Royal Company of the Philippines promoted direct and tariff-free trade between Spain.In1834, Free Trade was formally established in the Philippines and Manila became abustling port servicing Asia, Europe, and North American traders. During this time, tobacco,abaca, and sugar were the dominant Philippine exports13. The Spanish rule was weakened

12 Country Profile: Philippines. (2006, March). (Division, Library of Congress - Federal Research) Retrieved October 2014, from The

Library of Congress: http://lcweb2.loc.gov/frd/cs/profiles/Philippines.pdf

13 Philippines. (2006, March). (Division, Library of Congress - Federal Research) Retrieved October 2014, from The Library of Congress:


11

by the rise of nationalism through the writings and propaganda movement of the Ilustrados(Filipino elite and educated class) and the increasing activity of revolutionaries’ intent ongaining national independence. One prominent Ilustrado was Jose Rizal, the national heroof the Philippines, and the most prominent revolutionary group was the Katipunan led byAndres Bonifacio and Emilio Aguinaldo. In 1897, the Spanish troops defeated theinsurgents. The 336 years of Spanish Rule ended after the Spanish-American War, whereSpain ceded the Philippines to the United States of America through the signing of theTreaty of Paris. On 12 June 1898 Aguinaldo issued a declaration of independence, and in1989 the Malolos revolutionary congress promulgated a constitution that inauguratedAguinaldo as the first Filipino president of the republic.14

(3)American Rule

A guerilla war broke out between the Filipino insurgents, led by Aguinaldo, and theAmericans as a result of the United States not recognizing the Philippines’ independence. In1901, Aguinaldo was captured and swore allegiance to the United States. In the same year,William Howard Taft was appointed as the first U.S. governor of the Philippines, and hiscommission was granted legislative and executive powers. During this time the Philippinessaw the establishment of a judicial system with a legal and municipal code, a constabulary,and a civil service. In 1916 the United States passed the Jones Act which established anelected Filipino legislature, composed of the House of Representatives and the Senate. In1934 the US passed the Tydings-McDuffie Act which provided a transition period towardsindependence in 1946. This was also the means towards establishing a commonwealth inthe Philippines. In 1935 Manuel L. Quezon was elected to the position of President of thePhilippine Commonwealth.15

American rule was disrupted by the Japanese occupation of the country during World WarII. The Commonwealth government went into exile in the United States and a guerilla warensued between the Filipinos and the occupying forces. In 1944 the combined Americanand Filipino forces returned and liberated the country. In 1946 the Philippines becameindependent and the Republic of the Philippines was born. (Library of Congress - FederalResearch Division, 2006)16

http://lcweb2.loc.gov/frd/cs/profiles/Philippines.pdf








12

(4) The Philippine Republic

The United States of America cededsovereignty to the Philippines on 4 July1946, and Manuel Roxas was elected as thefirst president of the Republic of thePhilippines. Since then general popularelections have been held, and the followingpresidents of the Philippines were elected:Elpidio Quirino, Ramon Magsaysay, CarlosP. Garcia, Diosdado Macapagal, andFerdinand Marcos who later on establishedmartial law.

(5)Martial Law

In 1972 Marcos declared Martial law byvirtue of Proclamation No. 1081. Thiscurtailed civil liberties, closed Congress andmedia establishments, and resulted in thearrest of opposition leaders. During thistime widespread corruption and civil unrestcontributed to the decline of the economy.In 1983 opposition leader Benigno Aquinowas assassinated and his widow, CorazonAquino, decided to run for office. MartialLaw ended with the People PowerRevolution – a bloodless civilian-military uprising. This installed Corazon Aquino aspresident of the Philippines in 1986.17

(6)Post Martial Law to Present Time

Upon installation, then President Corazon Aquino ratified a new constitution in 1987 whichrestored the Presidential form of government and a bicameral congress. Her presidency wasfollowed by the administrations of Fidel Ramos, Joseph Estrada who was later onimpeached, Glorai Macapagal-Arroyo, and Benigno Aquino III - the present president ofthe Republic of the Philippines.

17 http://www.philippine-history.org/

Figure 1.1.1 Map of the Philippines


13

1.1.2.2 Geography

The Philippines is located in the Southeast Asian archipelago between the Philippine Seaand the South China Sea, as seen in Figure 1. The country is comprised of 7,107 islandswith a total area of 300,000 square kilometers, total land area of 298,170 square kilometers,and total water area of 1,830 square kilometers. These islands are divided into three majorisland groups, named Luzon, Visayas and Mindanao. From Tokyo to manila, it takes 4 to4.5 hours by airplane. Because of the country’s geographic features, various modes oftransportation play distinct roles in the movement of freight and passengers in the country.Water and road transport dominate the flow of goods and people, respectively. Railwaysand air transport modes have their respective markets and geographic coverage.18

1.1.2.3 Climate

The climate of the Philippines is described as tropical and maritime. It is characterized byrelatively high temperature, high humidity and abundant rainfall. This can be divided intotwo major seasons, namely the rainy and dry season. Rainy season is from June toNovember and dry season is from December to May. Typhoons have a great influence onthe climate and weather conditions of the Philippines. A great portion of the rainfall,humidity and cloudiness are due to the influence of typhoons. The mean annual rainfall ofthe Philippines varies from 965 to 4,064 millimeters annually.19 Monthly temperature andrainfall in Manila are shown in table and figure below.

Figure 1.1.2 Historical Monthly Rainfall and Temperature in the Philippines

Source: World Bank Climate Change Knowledge Portal (1990-2009)20

18 The World Factbook. Map of the Philippines. Retrieved October 2014, from

https://www.cia.gov/library/publications/the-world-factbook/geos/rp.html

19 Climate of the Philippines. (n.d.). Retrieved September 2014, from Philippine Atmospheric, Geophysical, and Astronomical Services

Administration: http://kidlat.pagasa.dost.gov.ph/cab/climate.htm

20 The World Bank. (2014.). Average Monthly Temperature and Rainfall in the Philippines from 1990-2009. Retrieved October 10 2014,


14

1.1.2.4 Demography

(1) Philippine Population

Based on the data from the National Statistics Office, the population of the Philippines wasestimated at 100,617,630 as of July 27, 2014. The annual average growth rate increasedfrom 1.9% year 2000 to 2010. As of 2014, the Philippines had become the 12th mostpopulous country in the world.21 2014 data from the UN World Population Prospectsillustrates trends and projections for the Philippine population, as shown in the graph below.

Figure 1.1.3 Philippines Population

Source: UN World Population Prospects, 2014http://sdwebx.worldbank.org/climateportal/index.cfm?page=country_historical_climate&ThisRegion=Asia&ThisCCode=PHL

According to data from the UN22, the life expectancy at birth of Filipino males and females,born from 2010 to 2015, are at 66.0 and 72.6 years respectively, and the birth rate is at24.24 births/1,000 population (est. 2014)23.

Together with the increase in the country’s population, the population of the middle class

from http://sdwebx.worldbank.org/climateportal/index.cfm?page=country_historical_climate&ThisRegion=Asia&ThisCCode=PHL

21 Philippines Population 2014. (2014). Retrieved October 2014, from World Population Review:

http://worldpopulationreview.com/countries/philippines-population/

22 United Nations Statistics Division. (n.d.). Country Profile: Philippines. Retrieved October 2014, from UN Data:

http://data.un.org/CountryProfile.aspx?crName=Philippines

23 Central Intelligence Agency. (2014, October). The World Factbook. Retrieved from Central Intelligence Agency:

https://www.cia.gov/library/publications/the-world-factbook/geos/rp.html


15

has also been growing. In an Ernst and Young publication24– Rapid Growth Markets(RGM) Forecast, they identified countries that are projected to have a 6% growth rate by2014. The Philippines, on average, has been posting a 6-7% GDP growth in 2013 and 2014,making it a high potential market -with several credit upgrades and a growing working-agepopulation. As such, the report anticipates that in these countries (the Philippine included),the economies and governments will become stronger, and the middle class will expandthrough an increase in the peoples’ purchasing power. When this occurs, global demandwill be influenced by the expanding middle class whose spending power is expected toincrease from $21 trillion to $51 trillion dollars in 2030. The middles class of RGMcountries, defined as households with daily expenditures between $10 and $100 per person,are expected to be significant drivers then of the global economy.

(2) Regional Population in the Philippines

Below is the projected population by region in the Philippines according to the NationalStatistics Office and 2000 Census-based Population Projection in collaboration with theInter-Agency Working Group on Population Projections. The interval is by 5-calendar year.

Table 1.1.1 Number of Licensed Government and Private Medical Institutions in the Philippines

Projected Population (in thousands)REGION 2010 2015ILOCOS 5,174 5,674

CAGAYAN VALLEY 3,365 3,651CENTRAL LUZON 10,159 11,123

CALABARZON 11,905 13,143MIMAROPA 3,018 3,417

BICOL 5,712 6,278WESTERN VISAYAS 7,578 8,318CENTRAL VISAYAS 7,029 7,741EASTERN VISAYAS 4,447 4,912

ZAMBOANGA PENINSULA 3,809 4,197NORTHERN MINDANAO 4,349 4,799SOUTHERN MINDANAO 4,362 4,709CENTRAL MINDANAO 4,080 4,524

NCR 11,552 12,221ARMM 3,229 3,588

CARAGA 2,550 2,800CAR 1,694 1,869

TOTAL 94,012 102,965Source: Adapted from List of Licensed Government and Private Hospitals as of December 31, 2013, by Bureauof Health Facilities and Services.

24 Cruz, C. (2013). The growth of the global middle class. Retrieved October 2014, from SGV:

http://www.sgv.ph/the-growth-of-the-global-middle-class-by-j-carlitos-g-cruz-september-09-2013/


16

(3) Population in the National Capital Region (NCR)

The population in the NCR region has grown over 2.0% on average in the last two decades.The region has 17 cities, Quezon, Manila, Caloocan, Pasig, Valenzuela, Marikina, Malabon,Mandaluyong, Novotas, and San Juan in the northern half, and Taguig, Paranaque, LasPinas, Makati, Muntinlupa, Pasay, and Pateros in the southern half. The northern half of theregion is more densely populated than in the South. Quezon City is the most denselypopulated area in the region with an estimated population of 2.8 million in 2010. Below is atable of population growth of the 17 cities in NCR.

Table 1.1.2 Estimated population of the cities in NCR 1990-2010

City Population （persons） CAGR

1990 2000 2010 '90-'10 '00-'10

NCR Total (Metro Manila) 7,948,392 9,932,560 11,855,975 2.02% 1.79%

NCR North 5,925,061 7,279,590 8,624,807 1.89% 1.71%

1. Quezon City 1,669,776 2,173,831 2,761,720 2.55% 2.42%

2. Manila, City of 1,601,234 1,581,082 1,652,171 0.16% 0.44%

3. Caloocan City 763,415 1,177,604 1,489,040 3.40% 2.37%

4. Pasig, City of 397,679 505,058 669,773 2.64% 2.86%

5. Valenzuela, City of 340,227 485,433 575,356 2.66% 1.71%

6. Marikina, City of 310,227 391,170 424,150 1.58% 0.81%

7. Malabon, City of 280,027 338,855 353,337 1.17% 0.42%

8. Mandaluyong, City of 248,143 278,474 328,699 1.42% 1.67%

9. Navotas, City of 187,479 230,403 249,131 1.43% 0.78%

10. San Juan, City of 126,854 117,680 121,430 -0.22% 0.31%

NCR South 2,023,331 2,652,970 3,231,168 2.37% 1.99%

1. Taguig City 266,637 467,375 644,473 4.51% 3.27%

2. Parañaque, City of 308,236 449,811 588,126 3.28% 2.72%

3. Las Piñas, City of 297,102 472,780 552,573 3.15% 1.57%

4. Makati, City of 453,170 471,379 529,039 0.78% 1.16%

5. Muntinlupa, City of 278,411 379,310 459,941 2.54% 1.95%

6. Pasay City 368,366 354,908 392,869 0.32% 1.02%

7. Pateros City 51,409 57,407 64,147 1.11% 1.12%

Source: Thomas Brinkhoff, http://www.citypopulation.de/php/philippines-admin.php

(4) Ethnicity, Religion, and Language

The Philippines contains diverse ethnicities, religions, and languages. Data from the latestcensus available in the Philippines states that as of year 2000, the Tagalog ethnic groupmakes up 28% of the country’s population, the Cebuanos make up 13%, and the Ilocanosmake up 9%. These are the top three biggest ethnic groups in the Philippines. They arefollowed by the Bisayas, Hiligaynon, and Bikol ethnic groups. (Philippines Population2014, 2014) The religion in the Philippines has been highly influenced by its history andlocation. 80% of the country’s population is Roman Catholics, 10% are from Christian


17

denominations, 5% are Muslims, and 5% are from other religious organizations. ThePhilippines has two official languages – Filipino (based on Tagalog) and English, alongwith numerous regional languages. The Philippines is considered the third largest Englishspeaking country in the world.25

1.1.2.5 Politics and economy in the Philippines

(1) Economic growth of the Philippines

Philippine economic growth boosted to 7.2 percent in 2013 despite the impact of TyphoonHaiyan (Yolanda) and other natural disasters during the year. The country’s strongmacroeconomic fundamentals sustained domestic demand and safeguarded the economyfrom the enduring weakness of the global economy. Strong performance of consumptionpowered by strong remittances and services, supported by investment and manufacturingexpansion, boosted growth. Private consumption grew by 5.6%, while private constructionalso grew by 8 percent due to low interest rates and the strong demand for office &residential spaces by workers in the business process outsourcing industry.

The Economy of the Philippines is the 38th largest in the world, according to 2013International Monetary Fund statistics, and is also one of the emerging markets in the world.Goldman Sachs estimates that by the year 2050, the Philippines will be the 14th largesteconomy in the world. Goldman Sachs also included the Philippines in its list of the NextEleven economies. According to HSBC, the Philippine economy will become the 16thlargest economy in the world, 5th largest economy in Asia and the largest economy in theSoutheast Asian region by 2050. Jim Yong Kim, the president of the World Bank, said thePhilippines could be “the next economic miracle in Asia”.

Relatively high rates of economic growth are projected over the forecast period, thougheasing from the fast pace in 2013. GDP growth is forecast at 6.4% in 2014 and 6.7% in2015. Signs are optimistic for continued growth in investment. Improved businessconfidence and rising inflows of foreign direct investment will support private investment.Confidence has been reinforced by the achievement last year of investment grade sovereigncredit ratings and improvements in several global competitiveness indices. For example, thePhilippines’ ranking in the World Bank’s Doing Business survey jumped by 30 places to108th of 189 economies in 2013. Other positive indicators for investment are sustainedexpansion in credit to businesses, increased investment in machinery and equipment, and abuoyant stock market, backed up by rising corporate earnings. Private consumption will

25 Department of Tourism. (2009). About the Philippines. Retrieved October 2014, from It's more fun in the Philippines:

http://www.tourism.gov.ph/sitepages/history.aspx


18

continue to benefit from remittance inflows and positive consumer sentiment, thoughhigher inflation and interest rates will likely reduce the pace of growth in consumerspending. The pace of increase in government spending is also expected to subside from2013.

One of the contributors to the economic growth of the Philippines is its import-export sector,as can be seen in the table below which documents the five year trend of import and exportby sector in the country.

Table 1.1.3 Foreign Trade of the Philippines from 1994 to 2013

(F.O.B. value in million U.S. dollars)

Year Total Trade Exports ImportsBalance of Trade

Favorable (Unfavorable)

2013 115,809.00 53,978.00 61,831.00 -7,853

2012 114,228.00 52,100.00 62,129.00 -10,029

2011 108,186.00 48,042.00 60,144.00 -12,102.00

2010 106,430.00 51,498.00 54,933.00 -3,435.00

2009 81,527.00 38,436.00 43,092.00 -4,656.00

2008 105,824.00 49,078.00 56,746.00 -7,669.00

2007 105,980.00 50,466.00 55,514.00 -5,048.00

2006 99,183.79 47,410.12 51,773.68 -4,363.57

2005 88,672.86 41,254.68 47,418.18 -6,163.50

2004 83,719.73 39,680.52 44,039.21 -4,358.69

2003 76,701.72 36,231.21 40,470.51 -4,239.30

2002 74,444.67 35,208.16 39,236.51 -4,028.35

2001 65,207.36 32,150.20 33,057.16 -906.96

2000 72,569.12 38,078.25 34,490.87 3,587.38

1999 65,779.35 35,036.89 30,741.46 4,294.43

1998 59,156.64 29,496.75 29,659.89 -163.14

1997 61,161.52 25,227.70 35,933.82 -10,706.12

1996 52,969.48 20,542.55 32,426.93 -11,884.38

1995 43,984.81 17,447.19 26,537.63 -9,090.44

1994 34,815.46 13,482.90 21,332.57 -7,849.67

Source: Adapted from National Statistics Coordination BoardRetrieved from: http://www.nscb.gov.ph/secstat/d_trade.asp

(2) Gross Domestic Product (GDP)

In 2013 the GDP of the Philippines was at$272.018 billion (at current US$). (PhilippineCountry Data) The services sector contributed 3.6 percentage points of the real GDPgrowth in the fourth quarter of 2013. This was followed by the industry sector with 2.8percentage points and agriculture with 0.1 percentage points. Fourth-quarter growth on the


19

supply side was mainly boosted by manufacturing, trade, finance and real estate.Meanwhile, on the demand side, growth was heightened by household consumption, whichadded 4.2 percentage points, and net exports, which contributed 1.6 percentage points.Construction had the biggest setback in the fourth quarter. The subsector contracted by 0.8percent due to stringent rules imposed on real estate lending in compliance with prudentialregulations. Government spending also slowed down by 5.2 percent, dropping from the 9.5percent growth posted in the fourth quarter of 2012. The deceleration was due to lowerdisbursements in personnel services and maintenance and other operating expenditures. Forthe full year, however, government spending jumped by 8.6 percent. Imports also sloweddown by 1.9 percent during the last quarter of 2013 from the 8 percent posted in the sameperiod in 2012. Aside from slowdowns in certain sectors, the combined impact of typhoonsand other disasters may have also reduced the full year real GDP growth by at least 0.1percentage points. The 2013 GDP growth is higher than the 6.8-percent posted in 2012. Thecountry's GDP grew by 3.7 percent in 2011 and 7.6 percent in 2010.

Table 1.1.4 Annual GDP Growth Rate of the Philippines

YEAR ANNUAL GDP GROWTH RATE (%)2013 7.22012 6.82011 3.72010 7.6

Source: World Bank

The GDP growth trend of ASEAN countries, including the Philippines are shown in thetable below. The Philippines remains as one of the best performing economies in the Asianregion in 2013 with annual growth rate of 7.2 percent, second only to China, which grew by7.7 percent.

Table 1.1.5 Historical GDP Growth Rates by Countries

GDP growth (annual %)

SEA Country 2009 2010 2011 2012 2013

Brunei -1.8 2.6 3.4 0.9 -1.8

Cambodia 0.1 6 7.1 7.3 7.5

East Timor 12.8 9.5 12 8.3 8.1

Indonesia 4.6 6.2 6.5 6.3 5.8

Laos 7.5 8.5 8 8.2 8.1

Malaysia -1.5 7.4 5.1 5.6 4.7

Singapore -0.6 15.2 6.1 2.5 3.9


20

Thailand -2.3 7.8 0.1 7.7 1.8

Vietnam 5.4 6.4 6.2 5.2 5.4

Philippines 1.1 7.6 3.6 6.8 7.2Source: Adapted from World Bank

(3) Industry Structure

Industries in the Philippines are categorized in three sectors: (1) agriculture, hunting,forestry and fishing sector, (2) industry sector, and (3) service sector. Under these sectorsare their relevant industry divisions. As of 2011 the service sector accounted for 55.81% ofthe GDP, while the industry sector accounted for 31.40% and agriculture, hunting, forestryand fishing accounted for 12.79%26. The table below summarizes the growth rates of eachindustry from 2010 until 2013, and the next table summarizes the amount of foreign andFilipino investments made per industry from 2004 to 2010. Healthcare sector is categorizedin “Service” sector inTable 1.1.6 and “Private Services” in Table 1.1.7.

Table 1.1.6 Historical Trend of Growth Rates per Industry

SECTORLabor Productivity (At Constant 2000

Prices)Growth Rates (%)

2010 2011 2012 2013 2010 2011 2012 2013PHILIPPINES 158,222 158,911 167,877 177,487 4.7. 0.4. 5.6. 5.7.

Agriculture, Hunting,Forestry and Fishing

55,425 55,420 57,799 59,706 0.6. ** 4.3. 3.3.

Industry 344,418 342,486 353,725 373,831 5.2. (0.6.) 3.3. 5.7.Services 170,183 172,033 181,227 188,715 2.8. 1.1. 5.3. 4.1.

Source: Adapted from Bureau of Employment and Labor Statistics (2010-2013)http://www.bles.dole.gov.ph/PUBLICATIONS/Current%20Labor%20Statistics/STATISTICAL%20TABLES/PDF/tab31.pdf

Table 1.1.7 Total Approved Investments of Foreign and Filipino Nationals by Industry

(in million PHP)

Industry 2004 2005 2006 2007 2008 2009 2010Agriculture 212 770 4,734 1,856 2,498 2,873 2,272

Communication - 2,079 47,042 14,222 2,186 6 -Construction 1,140 83 3,857 14,090 216 179 1,080

Electricity 8,564 21,659 45,403 139,078 131,923 32,296 189,920Finance & Real

Estate7,158 10,019 28,833 54,927 114,088 89,111 72,108

Gas 106,521 269 - 561 - 17 -Manufacturing 54,330 150,161 151,984 94,667 75,518 106,300 215,153

Mining 1,512 8,294 16,147 13,776 48,269 2,019 8,108Private Services 41,006 15,344 29,105 37,631 71,417 29,353 40,255

Storage 388 26 35 1,340 1,059 - -Trade 517 357 26,332 780 531 2,155 1,461

Transportation 467 22,172 3,530 10,329 16,516 2,830 12,248Water - - - 2,537 - 45,975 -

26 Economic Accounts. (2014). Retrieved September 2014, from Philippine Statistics Authority - National Statistical Coordination Board:

http://www.nscb.gov.ph/secstat/d_accounts.asp


21

Total 221,815 231,233 357,002 385,804 464,221 314,114 542,605Source: Adapted from National Economic and Development Authority (2004-2010)

The latest Economic Indicators for the Philippines for the first and second quarter of 2014can be seen in the table below.

Table 1.1.8 Philippine Economic Indicators (2014)

Economic Indicator 2nd Quarter 2014 1st Quarter 2014

Gross Rate of Gross National Income(at Constant 200o Prices)

7.3% 7.2%

Growth Rate of Gross DomesticProduct (at Constant 200o Prices)

6.4% 5.6%

Exports USD 5,461 million USD 5,483 million

Imports USD 5,494 million USD 4,821 million

Trade Balance USD -33 million USD 625 million

Balance of Payments USD -340 million USD 345 million

Broad Money Liabilities 7138,148 billion PHP 7,088,166 billion PHP

Interest Rate 2.0% 2.0%

National Government Revenues 169,980 million PHP 166,730 million PHP

National Government OutstandingDebt

5,713 billion PHP 5,683 billion PHP

Stocks Composite Index 7,050.9 PHP 6,6.8 PHP

Consumer Price Index(2006=100)

140.9 140.8

Headline Inflation Rate (2006=100) 4.4 4.9

Core Inflation Rate (2006=100) 3.4 3.4Source: Adapted from National Statistical Coordination Board (2014)

(4) Balance of payments

The Philippines' balance of payments (BOP) surplus narrowed in 2013 on the doubt causedby the US Federal Reserve's withdrawal of its economic stimulus. Data from the BangkoSentral ng Pilipinas (BSP/Central Bank of the Philippines) showed that the country's BOPsurplus dropped by 45 percent to $5.085 billion last year from $9.236 billion in 2012,narrowly missing the central bank's target of $5.3 billion for 2013. In December alone, thesurplus fell to $419 million or half the $837 million the month before. The narrower surplus


22

is attributed on uncertainties about global economic developments, plus the phasing of theretraction of monetary policy accommodation in the developed economies that haveheightened external risks to the BOP outlook. It, however, bears pointing out that the BOPsurplus continue to draw support from fundamentally-driven foreign exchange flows, suchas those in the current account that remains in surplus, from which the economy can buildresilience against external headwinds. The sustainability of the external payments surpluscontinues to be a real triumph given ongoing vulnerabilities and challenges in the globaleconomy.

36% increase in last year's current account stemmed from higher net receipts fromsecondary income and services, and a lower trade in goods deficit. Global activitystrengthened and world trade picked up in the latter part of 2013 arising from stable signsof recovery in advanced economies, particularly the US, Japan, and some core economiesin the euro area.

The trade in goods deficit showed a moderate improvement of 2.1% as the reduction inimports surpassed that of exports. Exports of goods dropped by 3.6% to $44.7 billion in2013 compared to $46.4 billion in 2012 due primarily to the decrease in shipments ofmanufactured goods from the previous year’s level. Imports of goods cut down by 3.1% to$63.3 billion in 2013, on account of lesser purchases of raw materials and intermediategoods, and mineral fuels and lubricants.

The surplus in the services account improved by 10.4% to $6.8 billion in 2013, due mainlyto greater net receipts from telecommunications, computer, and information services, aswell as personal, cultural, and recreational services. For the capital account, the countryended 2013 with a 21.8% increase to $115 million due mainly to higher capital transfers tothe national government. The financial account however recorded net outflows of $635million in 2013, a turnaround from the $6.7 billion net inflows in the previous year. Netoutflows were posted in the other investment account, which were alleviated partly byinflows of portfolio and direct investments. Unstable capital flows during 2013 reflectedsensitivity of financial markets to external developments. In particular, net inflows ofportfolio investments declined as risk appetite for emerging market assets was burdened bythe dreary recovery in the euro area as well as changing expectations on the US monetarypolicy.

For 2014, the BSP has set a financial account target of $3.6 billion in net outflows and acapital account goal of $135 million.


23

(5) Prices

Overall prices are anticipated to remain within a tolerance range for inflation. ConsumerPrice Index (CPI) in Philippines increased to 140.40 Index Points in July of 2014 from139.60 Index Points in June of 2014. The CPI, which measures changes in the prices paidby consumers for a basket of common good and services, averaged 40.23 Index Points from1957 until 2014, reaching a record high of 140.40 Index Points in July of 2014 and a recordlow of 1.30 Index Points in February of 1957. This is mostly driven by rising cost of foodand non-alcoholic beverages.

Year-on-year, food and non-alcoholic beverages went up to 8.2% in July from 7.4 percent inJune. Costs of education slightly rose to 5.1% in the month from 5.0% last month, whilethat of utilities were slightly up to 2.4% from 2.3% in May. Prices of health services in Julyrecorded a 3.2% increase from 3.0% rise in June. Costs of transport and culture and leisureare also up to 1.5% from 1.3% in July and to 1.3% from 1.2% in June. The first table belowshows the Consumer Price Index of the Philippines from 2006 until 2013. This data is beingreported by the National Statistics Office of the Philippines. The second and third tablebelow shows the exchange rates of the Philippine peso to the US Dollar (USD) andJapanese Yen (JPY) over a period of 20 years.

Table 1.1.9 Consumer Price Index (CPI) For All Income Households

Year 2006 2007 2008 2009 2010 2011 2012 2013

Philippines 100 102.9 111.4 116 120.4 126.1 130.1 134.0

National Capital

Region100 102.7 109.1 112.1 116.3 120.9 124.4 126.4

Areas Outside NCR 100 103.0 112.0 117.3 121.7 127.8 131.9 136.3

Source: Adapted from National Statistics Office (2006-2013)

Inflation rate in National Capital Region (NCR) in July was recorded at 3.9% on a yearlybasis and standing higher at area outside the NCR with 5.1% in the month. The rising priceadjustments happened in the heavily-weighted food items such as rice, fruits, vegetables,meat, fish, milk and eggs. Higher prices of gasoline nationwide and more expensivemedicines and selected items for personal care in many regions were also recorded duringthe month.


24

Table 1.1.10 Headline Inflation Rates in the Philippines

Source: Adapted from National Statistics Office Retrieved From: http://www.nscb.gov.ph/secstat/d_price.asp

Table 1.1.11 Exchange rate of USD to PHP in past 20 years

Year AverageUSD/PHP

MinUSD/PHP

MaxUSD/PHP

2013 42.47 40.54 44.70

2012 42.22 40.79 44.20

2011 43.30 41.93 44.60

2010 45.08 42.28 47.12

2009 47.58 46.00 49.02

2008 44.46 40.22 50.04

2007 46.07 41.01 49.13

2006 51.29 49.01 53.58

2005 55.06 53.01 56.30

2004 56.08 54.84 58.18

2003 54.32 50.94 57.35

2002 51.58 49.28 54.04

2001 51.19 46.16 55.31

2000 46.43 42.29 51.79

1999 42.85 38.68 45.54

1998 40.34 37.25 42.20

1997 32.59 29.35 35.19

1996 27.14 26.15 27.84

1995 24.19 23.30 25.88

1994 24.83 22.95 26.71

1993 28.05 26.39 29.50

Source:http://fxtop.com/en/historical-exchange-rates.php?A=1&C1=USD&C2=PHP&YA=1&CJ=1&DD1=01&MM1=01&YYYY1=1993&B=1&P=&I=1&DD2=31&MM2=12&YYYY2=2013&btnOK=Go%21

Inflation rate (%) CAGR Inflation rate (%) CAGR Inflation rate (%) CAGR

2013 3 -8% 1 .6 -1 6% 3.3 -7 %

2012 3.2 -9% 2.9 -1 0% 3.2 -9%

2011 4.6 -4% 4 -6% 5 -2%

2010 3.8 -9% 3.7 -9% 3.8 -9%

2009 4.1 -9% 2.8 -20% 4.6 -6%

2008 8.3 23% 6.2 6% 8.8 26%

2007 2.9 -47 % 2.7 -51 % 3 -45%

2006 5.5 n/a 6.2 n/a 5.3 n/a

Yearthe Philippines NCR Outside NCR


25

Table 1.1.12 Exchange rate of JPY to PHP in past 20 years

Year AverageJPY/PHP

MinJPY/PHP

MaxJPY/PHP

2013 2.27 2.50 2.13

2012 1.89 2.08 1.75

2011 1.85 2.00 1.75

2010 1.96 2.13 1.85

2009 1.96 2.13 1.82

2008 2.33 2.70 1.89

2007 2.56 2.78 2.38

2006 2.27 2.44 2.08

2005 2.00 2.27 1.82

2004 1.92 2.04 1.82

2003 2.13 2.33 1.92

2002 2.44 2.63 2.22

2001 2.38 2.63 2.13

2000 2.33 2.56 2.08

1999 2.63 2.94 2.22

1998 3.23 3.57 2.94

1997 3.70 4.00 3.33

1996 4.00 4.17 3.85

1995 3.85 4.35 3.45

1994 4.17 4.35 3.85

1993 4.00 4.76 3.45

Source:http://fxtop.com/en/historical-exchange-rates.php?A=1&C1=JPY&C2=PHP&YA=1&CJ=1&DD1=01&MM1=01&YYYY1=1993&B=1&P=&I=1&DD2=31&MM2=12&YYYY2=2013&btnOK=Go%21

1.1.3 Current situation and challenges of the health sector in the country

1.1.3.1 Morbidity and Mortality

The population of the Philippines is influenced by its mortality and morbidity. Seven out ofthe top ten causes of morbidity are infectious in origin, with tuberculosis, malaria, and HIVaccounting for a significant number of deaths from infectious diseases. The Department ofHealth (DOH) maintains statistics on the Leading Causes of Morbidity and Mortality - thelatest data of which are dated 2009 and 2010 respectively, as can be seen in the tables below.


26

Table 1.1.13 Top 10 Leading Causes of Mortality

5-Year Average (2004-2008) 2009*Rank Causes Number Rate** Number Rate**

1 Diseases of the Heart 82,290 94.5 100,908 109.4

2 Diseases of the Vascular System 55,999 64.3 65,489 71.0

3 Malignant Neoplasms 43,185 49.6 47,732 51.8

4 Pneumonia 35,756 41.1 42,642 46.2

5 Accidents*** 34,704 39.9 35,990 39.0

6 Tuberculosis, all forms 25,376 29.2 25,470 27.6

7 Chronic lower respiratory diseases 20,830 24.0 22,755 24.7

8 Diabetes Mellitus 19,805 22.7 22,345 24.2

9 Nephritis, nephritic syndrome andnephrosis

11,612 13.4 13,799 15.0

10 Certain conditions originating in theperinatal period

12,590 14.5 11,514 12.5

Notes: Excludes ill-defined and unknown causes of mortality*reference year** per 100,000 populations*** external causes of mortalitySource: Adapted from Leading Causes of Mortality. Retrieved from http://www.doh.gov.ph/node/198.html.

Table 1.1.14 Top 10 Leading Causes of Morbidity

2010*Rank Causes Number Rate**

1 Acute Respiratory Infection 1,289,168 1371.3

2 Acute Lower Respiratory TractInfection and Pneumonia

586,186 623.5

3 Bronchitis/Bronchiolitis 351,126 373.5

4 Hypertension 345,412 367.4

5 Acute Watery Diarrhea 326,551 347.3

6 Influenza 272,001 289.3

7 Urinary Tract Infection 83,569 88.9

8 TB Respiratory 72,516 77.1

9 Injuries 51,201 54.5

10 Diseases of the Heart 37,589 40.0

Notes: *reference year** per 100,000 populations

Source: Adapted from Leading Causes of Morbidity.

Retrieved from http://www.doh.gov.ph/kp/statistics/morbidity.html#.


27

1.1.3.2 Maternal and Child Health Situation in the Philippines

Maternal Mortality Ratio in the Philippines is defined as the number of women who dieduring pregnancy or within 42 days following pregnancy. The estimated figure wasmeasured at 163 per 100,000 live births for the year 2010. The main causes of MaternalMortality are (1) Complications related to pregnancy occurring in the course of labor,delivery, and puerperium, (2) Hypertension complicating pregnancy, childbirth, andpuerperium, (3) Postpartum Hemorrhage, and (4) Pregnancy with abortive outcome27. Dataon Maternal Mortality from 1993 until 2010 can be seen in the table below.

Table 1.1.15 Maternal Mortality in the Philippines

Year Maternal Mortality Ratio(Per 100,000 live births

Source

2010 163E National Statistics Coordination Board

2006 162 2006 Family Planning Survey

1998 172 1998 National Demographic and Health Survey

1993 209 1993 National Demographic Survey

Source: Adapted from National Statistics Office, Family Planning Survey 2006and National Objective for

Health 2011-2016.Retrieved from

http://web0.psa.gov.ph/content/maternal-mortality-slightly-declined-mdg-target-may-not-be-achievablel

In 2010, the Infant Mortality Rate, defined as the number of infants dying before reachingone year of age, was measured at 23 per 1,000 live births. Neonatal Mortality Rate wasmeasured at 14 and Under-5 Mortality Rate was at 29. Data from the Philippines NationalStatistics Office (NSO) shows the trends in Child Mortality Rate, as can be seen in thetable below:

Table 1.1.16 Child Mortality in the Philippines

Year Neonatal Mortality Infant Mortality Under-Five Mortality

2008 16 25 34

2003 17 29 40

1998 17.7 35.1 48.4

1993 17.8 33.6 54.2

1990 57 80Source: Adapted from National Demographic and Health Surveys.Retrieved from http://www.doh.gov.ph/sites/default/files/3%20Chapter1.pdf.

As of 2010, the top 10 leading causes of infant mortality are (1) Bacterial sepsis ofnewborns, (2) Pneumonia, (3) Respiratory distress of newborns, (4) Congenital

27 Department of Health 2012, National Objective for Health 2011-2016, from

http://www.doh.gov.ph/content/national-objectives-health-2011-2016.html


28

malformation of the heart, (5) Disorders related to short gestation and low birth weight, notelsewhere classified, (6) Congenital pneumonia, (7) Neonatal aspiration syndrome, (8)Intrauterine hypoxia and birth asphyxia, (9) Other congenital malformations, and (10)Diarrhea and gastroenteritis of presumed infectious origin (DOH, 2010).

1.1.3.3 Total Health Expenditure (THE) in the Philippines

When a patient receives medical care in a medical facility, the result accumulates to thetotal health expenditure of a country. The figure in the Philippines is increasing over 10%annually.

Figure 1.1.4 Total Health Expenditure and its Rate of Increase

*: Current priceSource: Philippine National Health Accounts 2005-2011Retrieved from http://www.nscb.gov.ph/stats/pnha/publication/NSCB_PNHA%202005-2011.pdf

Looking at the funding sources of THE, out-of-pocket (OOP) from individuals constantlyexceeds 50%. The share of the government stays at below 30%, that of National HealthInsurance 9%, and the rest around 11%.

The reality is far lagging behind from the goals set by the Health Sector Reform Agendawhere the optimal share is 40% from the government, 30% National Health Insurance,out-of-pocket from individuals 20%, and the rest 10%.

198216

269302

342381

431

9.1%

24.3%

12.3% 13.3%11.3%

13.2%

0%

5%

10%

15%

20%

25%

30%

0

100

200

300

400

500

2005 2006 2007 2008 2009 2010 2011

Total Health Expenditure*

Annual Rate of Increase

(Billion pesos)


29

Figure 1.1.5 Source of Funds for Total Health Expenditure

Source: Budget Facts and Figures, by the Legislative Budget Research and Monitoring Office.Retrieved from https://www.senate.gov.ph/publications/LBRMO%202013-02%20Budget%20Facts.pdf

1.1.3.4 Hospital Infrastructure in the Philippines

If we compare the number of beds per 1000 population with ASEAN countries, thePhilippines is largely lagging behind as shown below.

Table 1.1.17 Comparison of Beds per 1000 Population in ASEAN Countries

Country Beds per 1000 Population Note

Brunei 2.8 2012

Thailand 2.1 2010

Singapore 2.0 2011

Vietnam 2.0 2010

Malaysia 1.8 2011

Lao 1.5 2012

Philippines 1.0 2011

Indonesia 0.9 2012

Cambodia 0.7 2011

Source: The World Bank、Hospital Beds (per 1000 people)

Retrieved from http://data.worldbank.org/indicator/SH.MED.BEDS.ZS

OOP

Government

Health Insurance

Others

29%27% 28%

25% 26% 27% 27%

10% 9% 7% 7% 8% 9% 9%

49%52%

55% 57%53% 53% 53%

12% 12%10% 11% 13% 12% 11%

0%

10%

20%

30%

40%

50%

60%

2005 2006 2007 2008 2009 2010 2011


30

The table below shows the trend in the number of public and private hospitals. The numberof public hospitals has increased by approximately 1.1% over a decade until 2010. On theother hand, the number of private hospitals has gradually decreased from 1999 until early2000s and stays at its level thereafter.

Figure 1.1.6 Trend in the Number of Private and Public Hospitals

Source: National Statistical Coordination Board、Philippines in Figures2005～2014.Retrieved from http://www.nscb.gov.ph/secstat/d_vital.asp

From 2001, the total number of public and private hospitals has shown an increase by alittle short of 1% due to the increase in the number of public hospitals, however, the numberof beds per 10,000 populations remained unchanged due to the increase in the totalpopulation.

Figure 1.1.7 Trend in the Total Number of Hospitals and Beds per 10,000 Populations

Source: National Statistical Coordination Board、Philippines in Figures2005～2014.

648623 640

662 662 657694 703 701 711 723 730

1,146

1,0891,068 1,077

1,057 1,068 1,060 1,068 1,080 1,0731,098 1,082

600

700

800

900

1000

1100

1200

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Private Hospitals

Public Hospitals

0

(per 10,000 populations) (Hospitals)

1,500

1,600

1,700

1,800

1,900

2,000

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2001 2002 2003 2004 2005 2006 2007 2008 20090

Beds per 10,000 Population (Left axis)

Total Number of Beds (Right axis)


31

When we look at the size of hospitals in the Philippines as shown below, there are a largenumber of small size hospitals and very small number of large size hospitals which has 250and above bed size.

Figure 1.1.8 Number of Hospitals by Size of Bed（2007）

Source: How Are Government Hospitals Performing? A Study of Resource Management in

Government-Retained Hospitals. Retrieved from http://www.eaber.org/node/22807

Some of the major challenges in the health sector infrastructures are (1) fiscal constraintsfor investments in modern and advanced hospital facilities and equipment, (2) limitedaccess to health care in rural areas, (3) inefficient management of health services, and (4)lack of investments in advanced information technology (IT). Given these impediments,the National Government chose to invest and finance in Public-Private Partnership (PPP)Projects.

1.1.3.5 The Medical Institutions/Services

The official DOH Hospital Categories and corresponding characteristics based on ServiceCapabilities had been defined in DOH Administrative Order No. 2005-0029 (DOH Admin.Order No. 2005 – 0029, 2005) as listed below.

Table 1.1.18 Hospital Category and Levels under A.O.2005-0029

PhilHealth Hospital Category Hospital Levels

Primary Level 1Secondary Level 2

Tertiary Level 3Level 4(Teaching and Training Hospital)

Source: Adapted from Amendment to Administrative Order No. 147 s. 2004: Amending Administrative Order No.

Private

Public

Less than25 Beds

25-49Beds

50-99Beds

100-249Beds

Private

Public

Less than25 Beds

25-49Beds

50-99Beds

100-249Beds

250 Bedsand Above

Size of Bed


32

70-A series 2002 re: Revised Rules and Regulations Governing The Registration, Licensure And Operation Of

Hospitals And Other Health Facilities In The Philippines, 2005.

Retrieved from http://www.doh.gov.ph/system/files/ao2005-0029_0.pdf.

This definition was reclassified in 2012 as it has become evident that some medicalconditions and procedures that are compensable in a hospital setting could also be treated ina primary care facility without compromising the quality of care. This recognition togetherwith studies conducted by DoH prompted the authority to revise the classification ofhospitals and other health facilities in the Philippines.

Table 1.1.19 New Classification of Hospitals and Other Health Facilities under

A.O.2012-0012

Hospitals Other Health Facilities

General・Level 1・Level 2・Level 3 (Teaching/Training)

A. Primary Care FacilityB. Custodial Care FacilityC. Diagnostic/Therapeutic Facility

Specialty D. Specialized Out-Patient Facility

Table 1.1.20 New Classification of General Hospitals under A.O.2012-0012

Hospitals Level 1 Level 2 Level 3

Clinical

Services for

in-patients

Consulting Specialists in:MedicinePediatricsOB-GYNESurgery

Level 1 plus all: Level 2 plus all:

Departmentalized ClinicalServices

Teaching/training withaccredited residencytraining program in the 4major clinical services

Emergency andOut-patient Services Respiratory Unit Physical Medicine and

Rehabilitation UnitIsolation Facilities General ICUSurgical/MaternityFacilities High Risk Pregnancy Unit Ambulatory Surgical

ClinicDental Clinic NICU Dialysis Clinic

Ancillary

Services

Secondary ClinicalLaboratory

Tertiary ClinicalLaboratory

Tertiary Lab withhistopathology

Blood Station Blood Station Blood Bank

1st Level X-Ray 2nd Level X-Ray withmobile unit 3rd Level X-Ray

Pharmacy


33

Corresponding to the reclassification, PhilHealth reclassified its healthcare providercategory.

Table 1.1.21 Reclassification of PhilHealth Institutional Health Care Provider

under PhilHealth Circular s.2013-0014

DoH NewClassification of

Hospitals and OtherHealth Facilities

(A.O. 2012-0012)

Old Hospital Category(A.O. 2005-0029)

New PhilHealthIHCP Category

PhilHealthBenefit

Schedule

Hospitals

Level 1 Level 2(Secondary) Hospital Level 1 Secondary

Level 2 Level 3(Tertiary) Hospital Level 2

TertiaryLevel 3 Level 4

(Tertiary) Hospital Level 3

Other Health FacilitiesPrimary Care

Facilities(with in-patient beds)

– infirmaries/dispensaries

Level 1 (Primary)Primary Care Facilities(with in-patient beds) –infirmaries/dispensaries

PrimaryPrimary Care

Facilities(with in-patient beds)

– birthing homes

Primary Care Facilities(with in-patient beds) –

birthing homes

Primary CareFacilities

(without beds) –Medical Out-Patient

Clinics

Medical Out-PatientClinics Primary

SpecializedOut-Patient Facilities

– Dialysis Clinics

Note: Categorized asFree Standing Dialysis

Clinics (Secondary)

Specialized Out-PatientFacilities – Dialysis

ClinicsSecondarySpecialized

Out-Patient Facilities– Ambulatory Surgical

Clinics

Note: Categorized asAmbulatory SurgicalClinics (Secondary)

Specialized Out-PatientFacilities – Ambulatory

Surgical Clinics

The definition of hospital levels are as follows:

(1) Scope of services stipulated under Rule V. B. 1. b. of A.O. 2012-0012

1. General - A hospital that provides services for all kinds of illnesses, diseases, injuries ofdeformities. A general hospital shall provide medical and surgical care to the sick andinjured, maternity, newborn and child care. It shall be equipped with the service capabilities


34

needed to support board certified/eligible medical specialists and other licensed physiciansrendering services in, but not limited to, the following:

a. Clinical Services

1. Family Medicine;

2. Pediatrics;

3. Internal Medicine;

4. Obstetrics and Gynecology;

5. Surgery;

b. Emergency Services;

c. Outpatient Services;

d. Ancillary and Support Services such as, clinical laboratory, imaging facility andpharmacy

(2) Functional capacity of general hospitals stipulated under Rule V. B. 1. c. of A.O.2012-0012

1. General Hospital

a. Level 1 General Hospital:

A Level 1 hospital shall have as minimum the services stipulated under Rule V.B.1.b.1.ofA.O.2012-0012, including, but not limited to, the following:

1. A staff of qualified medical, allied medical and administrative personnel headedby a physician duly licensed by PRC;

2. Bed space for its authorized bed capacity in accordance with DOH Guidelines inthe Planning and Design of Hospitals;

3. An operating room with standard equipment and provision for sterilization ofequipment and supplies in accordance with:a. DOH Reference Plan in the Planning and Design of an Operating

Room/Theater;b. DOH Guideline on Cleaning, Disinfection and Sterilization of Reusable

Medical Devices in Hospital Facilities in the Philippines;4. A post-operative recovery room;5. Maternity facilities, consisting of ward(s), room(s), a delivery room, exclusively

for maternity patients and newborns;6. Isolation facilities with proper procedures for the care and control of infectious

and communicable diseases as well as for the prevention of cross infections;


35

7. A separate dental section/clinic;8. Provision for blood station;9. A DOH licensed secondary clinical laboratory with the services of a consulting

pathologist;10. A DOH licensed level 1 imaging facility with the services of a consulting

radiologist;11. A DOH licensed pharmacy

b. Level 2 General Hospital:

A Level 2 hospital shall have as minimum, all of Level 1 capacity, including, but notlimited to, the following:

1. An organized staff of qualified and competent personnel with Chief ofHospital/medical Director and appropriate board certified Clinical DepartmentHeads;

2. Departmentalized and equipped with the service capabilities needed to supportboard certified/eligible medical specialists and other licensed physiciansrendering services in the specialties of Medicine, Pediatrics, Obstetrics andGynecology, Surgery, their subspecialties and ancillary services;

3. Provision for general ICU for critically ill patients;4. Provision for NICU;5. Provision for HRPU;6. Provision for respiratory therapy services;7. A DOH licensed tertiary clinical laboratory;8. A DOH licensed level 2 imaging facility with mobile x-ray inside the institution

and with capability for contrast examinations.

c. Level 3 General Hospital:

A Level 3 hospital shall have as minimum, all of Level 2 capacity, including, but notlimited to, the following:

1. Teaching and/or training hospital with accredited residency training program forphysicians in the four (4) major specialties namely: Medicine, Pediatrics,Obstetrics and Gynecology, and Surgery.

2. Provision for physical medicine and rehabilitation unit;3. Provision for ambulatory surgical clinic;4. Provision for dialysis facility;5. Provision for blood bank;


36

6. A DOH licensed tertiary clinical laboratory with standardequipment/reagents/supplies necessary for the performance of histopathologyexaminations;

7. A DOH licensed level 3 imaging facility with interventional radiology.

Data below presents the number of Licensed Government and Private Medical Institutionsin the Philippines categorized per region and level as of 2013.

Table 1.1.22 Number of Licensed Government and Private General and Specialty

Hospitals in the Philippines 2013

REGION Level 1 Level 2 Level 3 Total

Hosp. Beds Hosp. Beds Hosp. Beds Hosp. Beds

ILOCOS 54 1,454 24 1804 3 536 81 3,794

CAGAYANVALLEY 62 1,821 7 765 1 500 70 3,086

CENTRALLUZON 124 4,300 35 2893 9 1,891 168 9,084

CALABARZON 149 4,698 56 4807 7 1,368 212 10,873

MIMAROPA 58 1,608 5 175 0 0 63 1,783

BICOL 64 985 43 2372 3 850 110 4,207

WESTERNVISAYAS 38 2,035 13 1298 8 2,200 59 5,533

CENTRALVISAYAS 23 994 13 1478 9 2,760 45 5,232

EASTERNVISAYAS 31 1,455 9 835 2 290 42 2,580

ZAMBOANGAPENINSULA 30 1,319 8 754 1 300 39 2,373

NORTHERNMINDANAO 79 2,494 23 2503 3 560 105 5,557

SOUTHERNMINDANAO 82 1,826 17 1724 6 1,430 105 4,980

CENTRALMINDANAO 33 1,568 13 1517 3 516 49 3,601

NCR 88 3,521 26 3155 59 22,220 173 28,896

CAR 31 574 22 1212 2 644 55 2,430

ARMM 32 705 5 225 0 0 37 930

CARAGA 11 614 7 675 0 0 18 1,289

PHILIPPINES 989 31,971 326 28,192 116 36,065 1,431 96,228

Source: Adapted from List of Licensed Government and Private Hospitals as of December 31, 2013, by Bureau of HealthFacilities and Services.

Retrieved from http://bhfs.doh.gov.ph/images/listing/distribution/2013distribution_pg_specialty_hosp.pdf


37

1.1.3.6 Medical Insurance Systems

As diseases are increasing, evolving and threatening most Filipinos, their fundamental measureis to invest a portion of their fortune in health-care services to ensure, maintain and improvetheir overall well-being.

(1) National Health Insurance Program

To assist Filipinos in gaining access to quality healthcare, the Philippine government institutedthe National Health Insurance Program (NHIP) in 1995, by passing Republic Act (RA) 787528,to provide universal health coverage for the Philippine population. In the Philippines, NHIP isthe largest insurance program in terms of coverage and benefit payments.Prior to the institution of NHIP, the government had administered a compulsory healthinsurance program for the formally employed known as the Medicare Program.

(2)PhilHealth

RA 7875 also created the Philippine Health Insurance Corporation (PHIC), more commonlyknown as PhilHealth, a government-owned and -controlled corporation. PhilHealth ismandated to administer the NHIP and to ensure that Filipinos have financial access to healthservices through payment of monthly premiums. In 1997, PhilHealth assumed theresponsibility of administering the Medicare Program for government employees from theGovernment Service Insurance System (GSIS) and in 1998, for private sector employees fromthe Social Security System (SSS). These formally employed individuals constitute thePhilHealth’s “regular program.” In 1996, the sponsored program (SP) was launched toaccelerate coverage of poor households. Three other programs were initiated primarily toexpand PhilHealth enrolment of specific population groups. In 1999, PhilHealth launched theindividually-paying program (IPP) that primarily targeted the informal sector and other sectorsof society that are difficult to reach. The IPP covers the self-employed, those who wereseparated from formal employment, employees of international organizations, and otherindividuals who cannot be classified into other programs (e.g. unemployed individuals whoare not classified as poor). In 2002, the non-paying program was introduced to targetpensioners and retirees. Finally, in 2005, PhilHealth assumed the administration of theMedicare Program for overseas Filipino workers (OFWs) from the Overseas Workers WelfareAdministration29.

28RA 7875 is titled, “An Act instituting a National Health Insurance Program for All Filipinos and Establishing The Philippine Health

Insurance Corporation for the Purpose”

29The Philippines Health System Review, The Asia Pacific Observatory on Health Systems and Polity


38

(3) Aquino Health Agenda (AHA) and Kalusugan Pangkalahatan (KP) PolicyHealth reforms in the Philippines had seen enactment of National Health Insurance Act of1995 and introduction of Health Sector Reform Agenda in 1999, aiming at introduction of thefollowing objectives during 1999 and 2004:

1) Reform of health financing (achievement of Universal Health Insurance)2) Reform of local health systems (improvement of access to quality healthcare)3) Reform of public health (control of diseases and advancement of primary healthcare

such as decreasing infant mortality rate)4) Reform of the hospital system (improvement of facility, equipment and human

resources)5) Reform of health regulations (development of standards and improvement of ability for

licensing).During 2005 and 2010, “FOURmula ONE for Health (F1)” was launched as the new healthsector reform implementation framework. Instead of five reform areas described in the HSRA,the FOURmula One for Health reforms are packaged into four distinct components, especiallyaiming at expanding health services for the poor:

1) Health Finance2) Health Regulation3) Health Service Delivery4) Good Governance in Health

This time also marked the enactment of two pieces of legislation: the Universally AccessibleCheaper and Quality Medicines Act of 2008 and the Food and Drug Administration Act of2009. However, despite the important progress made, successive reforms have not succeededin adequately addressing the persistent problem of inequity: NHIP universal coverageremained at 62% (2010); out-of-pocket expenditure continues to be the main source,accounting for 57 percent of the total health expenditure in 2007; and PhilHealth spendingas % of Total Health Expenditure remained at 9% (2007).

With these backgrounds, President Aquino, who inaugurated in June 2010 and promised allFilipinos to propel the policies in his inaugural address, launched the Aquino Health Agenda(AHA), through Administrative Order No. 2010-0036, to achieve universal health care for allFilipinos. It contains the operational strategy called Kalusugan Pangkalahatan (KP) whichaims KP seeks to ensure equitable access to quality health care by all Filipinos beginning with


39

those in the lowest income quintiles.

The three goals of AHA are the followings:1) Financial Risk Protection2) Better health outcomes3) Responsive health system

Three strategic thrusts of AHA are established and each thrust has detailed measures as shownbelow:1) Financial risk protection through expansion in NHIP enrollment and benefit delivery –The

poor shall be protected from the financial impacts of health care use by:a. Redirecting PhilHealth operations towards the improvement of benefit delivery;b. Expanding enrolment of the poor in the NHIP to improve population coverage;c. Promoting the availment of quality outpatient and inpatient services at accredited facilities

through reformed capitation and no balance billing arrangements for sponsored members,respectively,

d. Increasing the support value of health insurance for the poor through the use ofinformation technology upgrades to accelerate PhilHealth claims processing, amongothers, and

e. A continuing study to determine the segments of the population to be covered for specificrange of services and the proportion of the total cost to be covered/ supported.

2) Attainment of the health-related MDGs - This will be attained by:a. Deploying Community Health Teams (CHTs) that shall actively assist families in

assessing and acting on their health needs;b. Utilizing the life cycle approach in providing needed services, namely family planning;

ante-natal care; delivery in health facilities; essential newborn and immediate postpartumcare; and the package for children 0-14 years of age;

c. Aggressively promoting healthy lifestyle changes to reduce non-communicable diseases;d. Ensuring public health measures to prevent and control communicable diseases, and

adequate surveillance and preparedness for emerging and re-emerging diseases; ande. Harnessing the strengths of inter-agency and inter-sectoral approaches to health especially

with the Department of Education and Department of Social Welfare and the Departmentof Interior and Local Government.

3) Improved access to quality hospitals and health care facilities – This shall be achieved


40

through:a. A targeted health facility enhancement program that shall leverage funds for improved

facility preparedness to adequately manage the most common causes of mortality andmorbidity, including trauma;

b. Provision of financial mechanisms drawing from public-private partnerships to support theimmediate repair, rehabilitation and construction of selected priority facilities;

c. Fiscal autonomy and income retention schemes for government hospitals and healthfacilities;

d. Unified and streamlined DOH licensure and PhilHealth accreditation for hospitals andfacilities;

e. Regional clustering and referral networks of health facilities based on catchment areas toaddress the fragmentation of services;

f. Access to quality drugs; andg. Deployment of health professionals

(4) Revision of National Health Insurance Act

Republic Act (RA) no. 10606, which revised RA 7875 in 2013, mandates the State toprovide comprehensive health care services to all Filipinos through a socialized healthinsurance program that will prioritize the health care needs of the underprivileged, sick,elderly, persons with disabilities (PWDs), women and children and provide free health careservices to indigents. In practice, however, funding for indigent contributions has comeeither fully or partially from the national government, with the balance being shouldered bythe local government.

A major difference from the previous law is that the law mandates that it shall becompulsory for all provinces, cities and municipalities but notwithstanding the existence ofLGU-based health insurance programs.

Table 1.1.23 Total Enrollment by Sector per year (in million)

Sector 2007 2008 2009 2010 2011 2012 20131. Government-Employed 7.41 7.55 1.90 6.58 5.90 6.43 5.912. Private-Employed 24.89 23.35 7.01 22.63 18.10 19.51 20.433. Sponsored Program(SP )(active) 13.67 16.48 5.38 22.10 38.45 36.68 31.38

4. Individually-Paying Program(IPP) 11.09 12.36 3.33 10.92 9.91 11.82 11.99

5. Non-Paying Program(registered) 0.58 0.69 0.46 0.85 0.95 1.25 1.32

6. Overseas Workers Program 6.90 8.24 2.10 6.90 5.09 5.23 5.86


41

(registered)Total number of members 64.5 68.67 20.18 69.98 78.39 80.92 76.89

Source: Adapted from Stats And Charts.


42

The PhilHealth Budget for 2013 can be seen in the table below.

Table 1.1.24 Corporate Operating Budget CY 2013

Particulars 2013 (in million pesos)

Benefit Payments 76,420

Administrative Cost 5,914

a. Personal Services 3,665

b. Maintenance and Other Operating Expenses 2,249

Capital Expenditures 3,777

a. Infrastructure 3,559

b. Non-Infrastructure 218

Total 86,111

Source: Adapted from Corporate Operating Budget CY 2013, by Philippine Health Insurance Corporation[PhilHealth].

Retrieved from http://www.philhealth.gov.ph/about_us/transparency/COB_CY2013.pdf.

The NHIP covers six sectors as explained above: (1) government-employed; (2)private-employed; (3) sponsored program; (4) individually paying program; (5) non-payingprogram for retirees and pensioners (age 60 years old with 120 monthly contributions.Coverage also includes Parents who are 60 years old or above and Children below 21 yearsold and those with mental & physical disabilities); and (6) Overseas Filipino workers.Sponsored program is provided for members 30 including:

1) Sponsored members are PhilHealth members whose contributions are being paid for byanother individual, government agencies, or private entities. Members of the informaleconomy from the lower income segment who do not qualify for full subsidy under themeans test rule of the DSWD, whose premium contribution shall be subsidized by theLGUs or shall be through cost-sharing mechanisms between/among LGUs, and/orlegislative sponsors, and/or other sponsors and/or the member, including the NationalGovernment;

2) Orphans, abandoned (children who have no known family willing and capable to takecare of them and are under the care of the DSWD, orphanages, churches and otherinstitutions) and abused minors, out-of-school youths, street children, persons withdisability (PWD), senior citizens and battered women under the care of the DSWD, or anyof its accredited institutions run by NGOs or any non-profit private organizations, whosepremium contributions shall be paid for by the DSWD;

30 Sponsored Members (n.d.). Retrieved October 7, 2014, from http://www.philhealth.gov.ph/members/sponsored/


43

3) Barangay health workers, nutrition scholars, barangay tanods, and other barangayworkers and volunteers, whose premium contributions shall be fully borne by the LGUsconcerned; and

4) Un-enrolled women who are about to give birth, whose premium contributions shall befully borne by the National Government and/or LGUs and/or legislative sponsors or theDSWD if such woman is an indigent as determined by it through the means test.

PhilHealth Members are entitled to benefits when: (1) at least 3 consecutive monthlycontributions within the immediate 6 months prior to admission; (2) The 45 days allowancefor room and board has not been consumed yet; and (3) Confinement in an accreditedhospital of not less than 24 hours with the exception that it must be an Emergency case asdefined by PhilHealth, patient died and patient was transferred to another hospital. Thereare established mandated benefits for: Inpatient Care such as subsidy for room and board,drugs and medicines, laboratory exam, use of operating room complex, and professionalfees for confinements of not less than 24 hours; and Outpatient Care such as Day surgeries,dialysis and cancer treatment procedures such as chemotherapy and radiotherapy inaccredited hospitals and free-standing clinics. Also available are: Special Benefit Packagesfor certain medical and surgical procedures; Treatment of new cases of pulmonary andextra-pulmonary tuberculosis in children and adults are covered through the DirectlyObserved Treatment Shortcourse or DOTS, the shortest and most effective internationallyaccepted treatment protocol for tuberculosis (TB); SARS and Avian Influenza; and NovelInfluenza A (H1N1). However, the benefits granted shall not cover expenses for the servicesexcept when after actuarial studies, recommends their inclusion subject to the approval ofthe Board: (a) non-prescription drugs and devices; (b) alcohol abuse or dependencytreatment; (c) cosmetic surgery; (d) optometric services; (e) fifth and subsequent normalobstetrical deliveries; and (f) cost-ineffective procedures. Confinement in a non- accreditedhospital is possible when certain conditions are met (e.g. the case is emergency, the hospitalhas a current Department of Health (DOH) License, and transfer and referral to aPhilHealth accredited hospital is physically impossible). Claim benefits are also availablefor confinement abroad with proper documentary requirements.


44

Source Adapted from Premium Contribution Table, by PhilHealth.Retrieved from http://www.philhealth.gov.ph/partners/employers/contri_tbl.html.

The PhilHealth premium payments per salary bracket can be seen in the table below.

Table 1.1.25 PhilHealth Premium Contribution Table (in PHP)

Salary Bracket Monthly SalaryRange

MonthlySalary Base

Total MonthlyPremium

Employee Share EmployerShare

*Employee share represents half of the total monthly premiumwhile the other half is shouldered by the employer.

1 8,999.99 and below 8,000.00 200.00 100.00 100.002 9,000.00 - 9,999.99 9,000.00 225.00 112.50 112.503 10,000.00 - 10,999.99 10,000.00 250.00 125.00 125.004 11,000.00 - 11,999.99 11,000.00 275.00 137.50 137.505 12,000.00 - 12,999.99 12,000.00 300.00 150.00 150.006 13,000.00 - 13,999.99 13,000.00 325.00 162.50 162.507 14,000.00 - 14,999.99 14,000.00 350.00 175.00 175.008 15,000.00 - 15,999.99 15,000.00 375.00 187.50 187.509 16,000.00 - 16,999.99 16,000.00 400.00 200.00 200.00

10 17,000.00 - 17,999.99 17,000.00 425.00 212.50 212.5011 18,000.00 - 18,999.99 18,000.00 450.00 225.00 225.0012 19,000.00 - 19,999.99 19,000.00 475.00 237.50 237.5013 20,000.00 - 20,999.99 20,000.00 500.00 250.00 250.0014 21,000.00 - 21,999.99 21,000.00 525.00 262.50 262.5015 22,000.00 - 22,999.99 22,000.00 550.00 275.00 275.0016 23,000.00 - 23,999.99 23,000.00 575.00 287.50 287.5017 24,000.00 - 24,999.99 24,000.00 600.00 300.00 300.0018 25,000.00 - 25,999.99 25,000.00 625.00 312.50 312.5019 26,000.00 - 26,999.99 26,000.00 650.00 325.00 325.0020 27,000.00 - 27,999.99 27,000.00 675.00 337.50 337.5021 28,000.00 - 28,999.99 28,000.00 700.00 350.00 350.0022 29,000.00 - 29,999.99 29,000.00 725.00 362.50 362.5023 30,000.00 - 30,999.99 30,000.00 750.00 375.00 375.0024 31,000.00 - 31,999.99 31,000.00 775.00 387.50 387.5025 32,000.00 - 32,999.99 32,000.00 800.00 400.00 400.0026 33,000.00 - 33,999.99 33,000.00 825.00 412.50 412.5027 34,000.00 - 34,999.99 34,000.00 850.00 425.00 425.00

28 35,000.00 and up 35,000.00 875.00 437.50 437.50

(5) Health Maintenance Organizations (HMOs)

An HMO is a prepaid health-care service provider that offers comprehensive health coverageto its members by contracting the services of hospitals, physicians and other healthprofessionals. It operates on the idea of risk-sharing, with the prime objective of minimizingthe financial loss of a member by covering the costs of the availed medical service through theHMO’s common fund. The Bureau of Health Facilities and Services of the Department ofHealth (DOH), regulates the operation of Health Maintenance Organizations (HMO) in thePhilippines. As of December 31, 2012, the Philippine HMO industry is comprised of 22 dulylicensed HMOs operating in the country, which are either classified as investor-based,


45

community-based or a cooperative.With the industry continuing to progress, government intervention has become instrumental.This intervention is currently limited to imposing conditions on HMOs. Clearances are issuedupon the submission of several requirements. The official trade association of HMOs in thePhilippines, the Association of Health Maintenance Organizations of the Philippines(AHMOPI), was established to somehow address the challenges brought by the evolvingeconomic climate. Even complaints filed against AHMOPI-affiliated companies are examinedby the association before they are elevated to the government bodies concerned. Thisarrangement would have sufficed, had it not been limited only to AHMOPI members, leavingnon-affiliated HMOs still largely unregulated. Currently, AHMOPI members include BlueCross Health Care, Inc.; Caritas Health Shield, Inc.; Cocolife Health Care; Fortune Medicare,Inc.; Health Maintenance, Inc.; Health Plan Philippines, Inc.; Insular Health Care, Inc.;Intellicare; Maxicare Healthcare Corporation (industry leader in the Philippines); MedicardPhilippines, Inc.; Medocare Health Systems, Inc.; PhilHealthCare, Inc.; Star HealthcareSystems, Inc.; and Value Care Health Systems, Inc.Depending on the HMO, there are categories for various levels of program with certain limitof peso value for coverage. Cards are issued to the beneficiaries and will be presented togetherwith supporting identification cards bearing signature and photo to the accredited facilities ofthe HMO, which is usually true during emergency situations. Some HMOs allow you toproceed to non-accredited HMO Facilities, but the medical availment will be on areimbursement basis based on your program’s reimbursement provisions. For out-patient,there is usually a medical coordinator commissioned on-site who is also a medical practitionerto assess and prescribe the necessary medical treatment for the patient. For elective andnon-emergency confinement, usually an admitting order from the physician must be secured inorder to be admitted to the medical facility. Annual check-up and preventive care benefitsmight also be included in your program.HMOs generally cover any health services that are medically necessary, apart from procedureswhich are experimental, investigational, or cosmetic. Many HMOs also do not coverpre-existing chronic medical conditions and dreaded diseases. Pre-existing conditions are anysicknesses that were developed prior to availing of the health care plan, such as hypertension,asthma, arthritis, etc. Dreaded diseases are serious sickness which have a significant impact onlifestyle, longevity, incur high costs, and cause significant and permanent morbidity. Thesediseases can include cancer and heart disease.Most HMOs will not cover services rendered by non-HMO doctors, special or private nursingservices, recuperation, quarantine, and rehabilitation medicine, pre-employment check-ups,procurement of medical appliances, out-patient medicines and supplies, reconstructive


46

surgeries, organ transplants, laser eye surgery, circumcision, fertility treatments, artificialinsemination, sex change, congenital abnormalities, developmental delays,neurodevelopmental disorders, STD’s, Guillaine-Barre syndrome, procedures related topregnancy, morbid obesity, sleeping and eating disorders, and external forces such as wars,epidemics, and travel-related injuries.In some cases, these exclusions can be waived with prior authorization (“Pamilya Care HealthServices Plan,” n.d.).

1.1.4 Laws and Regulations

This section summarizes the relevant laws and regulations in the Philippines for hospitalconstruction and operation, establishment of a company and foreign investment.

1.1.4.1 Hospital Construction and Operations

(1) Hospital Construction

A hospital shall be planned and designed to observe appropriate architectural practices andto conform to applicable codes as part of normal professional practice. References shall bemade to the following:31

・P. D. 1096 – National Building Code of the Philippines and Its Implementing Rules andRegulations

・P. D. 1185 – Fire Code of the Philippines and Its Implementing Rules and Regulations・P. D. 856 – Code on Sanitation of the Philippines and Its Implementing Rules and

Regulations

・B. P. 344 – Accessibility Law and Its Implementing Rules and Regulations・R. A. 1378 – National Plumbing Code of the Philippines and Its Implementing Rules and

Regulations

・R. A. 184 – Philippine Electrical Code

Excerpts from some of the above codes are as follows:

1) National Building Code of the Philippines

Hospital construction is firstly regulated as a building under Presidential Decree No. 1096,National Building Code of the Philippines, and its Implementing Rules and Regulations.

31 Guidelines in the Planning and Design of a Hospital and Other Health Facilities, Department of Health, November 2004


47

Table 1.1.26 Examples of Hospital related regulations under National Building Code

of the Philippines (P.D. 1096)

Related Articles Contents

CHAPTER IIIPERMITS ANDINSPECTION

Section301

Building Permits.

No person, firm or corporation, including any agency orinstrumentality of the government shall erect, construct, alter, repair,move, convert or demolish any building or structure or cause thesame to be done without first obtaining a building permit thereforfrom the Building Official assigned in the place where the subjectbuilding is located or the building work is to be done.

CHAPTER VIICLASSIFICATIONAND GENERALREQUIREMENTOF ALLBUILDINGS BYUSE OFOCCUPANCY

Section701

Occupancy Classified.

(a) Buildings proposed for construction shall be identified accordingto their use or the character of its occupancy and shall be classifiedas follows:

(1) to (3) omitted.

(4) Group D. InstitutionalGroup D Occupancies shall include:

Division 1. Mental hospitals, mental sanitaria, (omitted).Division 2. (Omitted), hospitals, (omitted).

(5) Group E. Business and MercantileGroup E Occupancies shall include:Division 1. (Omitted).Division 2. Wholesale and retail stores, office buildings, (omitted).


Section702

Section 702. Change in Use.

No change shall be made in the character of occupancy or use of anybuilding which would place the building in a different division of thesame group of occupancy or in a different group of occupancies,unless such building is made to comply with the requirements of thiscode for such division or group of occupancy. The character ofoccupancy of existing buildings may be changed subject to theapproval of the Building Official and the building may be occupiedor purposes set forth in other Groups: Provided the new or proposeduse is less hazardous, based on life and fire risk, than the existinguse.


48


Section703

Mixed Occupancy.

(a) General RequirementsWhen a building is of mixed occupancy or used for more than oneoccupancy, the whole building shall be subject to the most restrictiverequirement pertaining to any of the type of occupancy found thereinexcept in the following: (omitted)

CHAPTER XIIGENERALDESIGN ANDCONSTRUCTIONREQUIREMENTS

Section1207(b)(3)

Arrangement of Exits. If only two exits are required they shall beplaced a distance apart to not less than one-fifth of the perimeter ofthe area served measured in a straight line between exits. Wherethree or more exits are required they shall be arranged a reasonabledistance apart so that if one becomes blocked, the others will beavailable.


Section1207(b)(4)

Distance to Exits. No point in a building without a sprinkle systemshall be more than 45.00 meters from an exterior exit door, ahorizontal exit, exit passageway, or an enclosed stairway, measuredalong the line of travel. In a building equipped with a completeautomatic fire extinguishing system the distance from exits may beincreased to 60.00 meters.


Section1207(d)(4)

Corridors and Exterior Exit Balconies.Dead Ends. Corridors and exterior exit balconies with dead ends arepermitted when the dead end does not exceed 6.00 meters in length.

Source: National Building Code of the PhilippinesRetrieved from http://ray.dilg.gov.ph/files/national_building_code_of_the_philippines.pdf.

The party who intends to construct a building needs to obtain a Building Permit from local


49

authorities before starting construction. A Building Permit is a collective term used forpermissions issued for constructions such as civil engineering, electric work, fit-out work,etc., and can be obtained at a municipal office, which has jurisdiction over the constructionwork.

Regulations related to the Permit are governed by municipal governments based on thePresidential Decree No. 1096, National Building Code. The party needs to confirm theregulations as each municipality has different regulations.

A Building Permit is issued after assessment by a City Engineer. Constructions may not beinitiated without obtaining the Permit. Generally, the contractor drafts the necessarydocuments and presents to the client for signing.32

2) Republic Act No.9514, Revised Fire Code of the Philippines 2008, and its ImplementingRules and Regulations

Section 2 of the Revised Act defines that it is the policy of the State to ensure public safetyand promote economic development through the prevention and suppression of all kinds ofdestructive fires and promote the professionalization of the fire service as a profession.Towards this end, the Revised Act also stipulates that the State shall enforce all laws, rulesand regulations to ensure adherence to standard fire prevention and safety measures, andpromote accountability for fire safety in fire protection service and prevention service.

In order to realize the content of this article, the Implementing Rules and Regulationsstipulate more detailed items and include rules and regulations regarding hospitals.

Table 1.1.27 Excerpts of Hospital related regulations stipulated in the Implementing

Rules and Regulations (IRR) of Revised Fire Code of the Philippines 2008 (RA 9514)


RULE 9.

DIVISION 4.

ENFORCEMENT AND ADMINISTRATION OF FIRE SAFETYMEASURES

FIRE SAFETY INSPECTION CERTIFICATE

SECTION9.0.4.1 FSIC AS A PRE-REQUISITE FOR ISSUANCE OFPERMIT/LICENSEUpon compliance of the fire safety requirements under Rule 10 of thisIRR, a Fire Safety Inspection Certificate (FSIC) shall be issued by the

32 System of Construction Work in the Philippines（p8）, Japan External Trade Organiation, March 2014


50

BFP as a pre –requisite for the issuance of Business or Mayor’sPermit, Permit to Operate, Occupancy Permit, PHILHEALTHAccreditation for Hospitals, DOH License to Operate and otherpermits or licenses being issued by other government agencies.

RULE10

CHAPTER2

DIVISION3

FIRE SAFETY MEASURESFIRE SAFETY IN BUILDINGS, STRUCTURES AND FACILITIESCLASSIFICATION OF OCCUPANCYA. A building or structure shall be classified as follows:1. Assembly (omitted)2. Educational (omitted)3. Health Care

a. Health care facilities are those used for purposes of medical orother treatment or care of persons where such occupants aremostly incapable of self preservation because of age, physical ormental disability, or because of security measures not under theoccupants’ control.

b. Health care facilities include: hospitals; nursing homes; birthcenters; and residential custodial care centers such as nurseries,homes for the aged and the like.

4. (omitted)

RULE10

CHAPTER2

DIVISION10

HEALTH CARE OCCUPANCIES

GENERAL REQUIREMENTSA. Definitions1. Hospitals

A building or part thereof used for the medical, psychiatric,obstetrical or surgical care, on a 24-hour basis, of four (4) or moreinpatients. Hospitals, wherever used in this Chapter, shall includegeneral hospitals, mental hospitals, tuberculosis hospitals, children'shospitals, and any such facilities providing inpatient care.

2. (Omitted)B. Fundamental Requirements1. All health care buildings shall be so designed, constructed,

maintained, and operated as to minimize the possibility of a fireemergency requiring the evacuation of occupants. (omitted)


51

C. Emergency Rooms, Operating Rooms, Intensive Care Units,Delivery Rooms and Other Similar FacilitiesEmergency rooms, operating rooms, intensive care units, deliveryrooms and other similar facilities shall not be located more than one(1) storey above or below the floor of exit discharge. (omitted)

SECTION10.2.10.2

EXIT DETAILSA. Number and Types

1. Exits shall be restricted to the following permissible types;a. Doors leading directly outside the buildingb. Stairs and smoke-proof enclosuresc. Rampsd. Horizontal exitse. Exit Passageways

2. At least two (2) exits of the above types, remote from each other,shall be provided for each floor or fire section of the building.

3. Elevators constitute a supplementary facility, but-shall not becounted as required exits.

(omitted)C. Access to Exit

1. (omitted)2. Travel distance shall comply with the following:

a. Between any room door intended as exit access and an exitshall not exceed thirty (30) meters;

b. Between any point in a room and an exit shall not exceed fortysix (46) meters;

c. Between any point in a health care sleeping room or suite andan exit access door of that room or suite shall not exceedfifteen (15) meters.

d. Travel distance shall be measured in accordance with Section10.2.5.2 of this IRR.

e. The travel distances in para (2) (a) and (b) above may beincreased by fifteen meters (15 m) in buildings completelyequipped with an automatic fire suppression system.

(Omitted.)


52

SECTION10.2.10.3

PROTECTIONA. Subdivision of Building Spaces

1. Smoke Partitions Required - Smoke partitions shall be provided,regardless of building construction type, as follows:a. To divide into at least two (2) compartments every storey used

by inpatients for sleeping or treatment and any storey having anoccupant load of fifty (50) or more persons.

b. To limit on any storey the maximum area of each smokecompartment to no more than two thousand one hundred squaremeters (2,100 m2), of which both length and width shall be nomore than forty six meters (46 m).

(Omitted.)

Source: Revised Fire Code of the Philippines of 2008Retrieved from http://www.lawphil.net/statutes/repacts/ra2008/ra_9514_2008.html

3) Code on Sanitation, PD856

The Code was enacted in 1975 under the President Marcos administration by compiling allpublic health related laws and regulations that had been scattered in numerous volumes ofstatute books. The Code stipulates functions and authorities of the Department of Health,water supply, food establishment, public laundry, school sanitation and health services,industrial hygiene, public spaces such as public baths, accommodations and airports,vermin control, sewage and refuse disposal, nuisance and offensive trades and occupations,environmental pollutions, and disposal of dead persons, among others.

Examples of hospital related regulations are as follows:

Table 1.1.28 Examples of Hospital Related Regulations under Code on Sanitation,

PD856


CHAPTER VPUBLICLAUNDRY

Section 39

Special Requirements The following requirements shall be enforced:(a) All articles to be laundered coming from hospitals and infected

sources shall be treated by exposure to a sufficient quantity of hotwater detergents or by other effective means of disinfection.


53

(b) All linen, bed clothes, pajamas, towels, bedsheets, pillow cases, etc.that have come in contact with any form of radioactivity should beisolated in a certain area and monitored by Radiation Safetypersonnel before sending these articles for laundry. If any amount ofradioactive contamination is found, the affected article should be setaside and the radioactivity allowed to completely decay before saidarticle is sent for laundry.

(Omitted.)

CHAPTERXVII

SEWAGECOLLECTIONANDDISPOSAL,EXCRETADISPOSALANDDRAINAGE

Section 80

Special Precaution for Radioactive Excreta and Urine ofHospitalized Patient.(a) Patients given high doses of radioactive isotope for therapyshould be given toilet facilities separate from those used by"non-radioactive" patients.(b) Radioactive patients should be instructed to use the same toiletbowl at all times and to flush it at least 3 times after its use.

Source: Code on SanitationRetrieved from http://www.doh.gov.ph/sites/default/files/code_on_sanitation_phils.pdf

(2) Hospital Operations

The National Health Insurance Act, Republic Act No. 7875 enacted in 1995, has beenrevised twice by RA 9241 and RA 10606 and is now dubbed as The National HealthInsurance Act of 2013. Hospitals are required to abide by the rules under the Act and itsRevised Implementing Rules and Regulations.

1) Regulations of the Revised Implementing Rules and Regulations of the National HealthInsurance Act of 2013

Table 1.1.29 Major Regulations on Hospital Operations under The National Health

Insurance Act of 2013 (RA10606)



54

Article IV. THEPHILIPPINEHEALTHINSURANCECORPORATION

SEC. 16.

Powers and Functions. – The Corporation shall have the followingpowers and functions:(Omitted.)m. to visit, enter and inspect facilities of health care providers and

employers during office hours, unless there is reason to believe thatinspection has to be done beyond office hours, and where applicable,secure copies of their medical, financial, and other records and datapertinent to the claims, accreditation, premium contribution, and thatof their patients or employees, who are members of the Program;

(Omitted.)

t. to conduct post-audit on the quality of services rendered by healthcare providers;

(Omitted.)

Article VIII.HEALTH CAREPROVIDERS

SEC. 31

Authority to Grant Accreditation. - The Corporation shall have theauthority to grant to health care providers accreditation which confersthe privilege of participating in the Program.

SEC. 33 Minimum Requirements for Accreditation. – The minimumaccreditation requirements for health care providers are as follows:

a. human resource, equipment and physical structure in conformity withthe standards of the relevant facility, as determined by theDepartment of Health;

b. acceptance of formal program of quality assurance and utilizationreview;

c. acceptance of the payment mechanisms specified in the followingsection;

d. adoption of referral protocols and health resources sharingarrangements;

e. recognition of the rights of patients; andf. acceptance of information system requirements and regular transfer

of information.

SEC. 34 Provider Payment Mechanisms. – The following mechanisms for public


55

and private providers shall be allowed in the Program:

a. Fee-for-service payments – payments made by the Corporation forprofessional fees or hospital charges, or both, based on arrangementswith health care providers. This fee shall be based on a schedule to beestablished by the Board which shall be reviewed periodically but notless than every three (3) years;

b. Capitation of health care professionals and facilities, or networks ofthe same including HMOs, medical cooperatives, and other legallyformed health service groups;

c. Case-based payment;d. Global budget; ande. Such other provider payment mechanisms that may be determined

and adopted by the Corporation.Subject to the approval of the Board, the Corporation may adopt otherpayment mechanisms that are most beneficial to the members and theCorporation.

(Omitted.)

SEC. 34-A Other Provider Payment Guidelines. – No other fee or expense shallbe charged to the indigent patient, subject to the guidelines issued bythe Corporation.

(Omitted.)

SEC. 35 Reimbursement and Period to File Claims. – All claims forreimbursement or payment for services rendered shall be filed within aperiod of sixty (60) calendar days from the date of discharge of thepatient from the health care provider.

(Omitted)

SEC. 37 Quality Assurance. – Under the guidelines approved by theCorporation and in collaboration with their respective Offices, healthcare providers shall take part in programs of quality assurance,utilization review, and technology assessment that have the followingobjectives:


56

(Omitted.)

SEC. 38 Safeguards Against Over and Under Utilization. – It is incumbent uponthe Corporation to set up a monitoring mechanism to be operationalizedthrough a contract with health care providers to ensure that there aresafeguards against:

a. over-utilization of services;b. unnecessary diagnostic and therapeutic procedures and intervention;c. irrational medication and prescriptions;d. under-utilization of services; ande. inappropriate referral practices.

The Corporation may deny or reduce the payment for claims when suchclaims are attended by false or incorrect information and when theclaimants fails without justifiable cause to comply with the pertinentrules and regulations of this Act.

Source: National Health Insurance Act of 2013Retrieved from http://www.philhealth.gov.ph/about_us/irr_nhia2013.pdf

Table 1.1.30 Major Regulations on Hospital Operations under Revised Rules and

Regulations of The National Health Insurance Act of 2013


Rule III

SECTION 64

PERFORMANCE MONITORING OF HEALTH CARE PROVIDERSThe Corporation shall develop and implement a performance monitoringsystem for all health care providers. The monitoring system shallprovide for, among others:

a. Periodic actual inspection of facilities and offices when necessary andappropriate;

b. Analysis of mandatory monthly hospital reports and other reportorialrequirements as determined by the Corporation;

c. Periodic review of health facility data and patient’s chart review forpurposes of determining quality and cost-effectiveness as well asadherence to practice guidelines by health care providers;

d. Conduct of utilization review;


57

e. Peer review, adverse reports and other pertinent information;f. Conduct of patient satisfaction surveys;g. Periodic assessment of the performance of all health care providers

based on performance commitment and standards;h. Inspection and audit of books, records, billing statements, medical

charts, doctor’s notes, and other documents and processes deemedimportant by the Corporation to complete a thorough review;

i. Inspection of books of accounts, ledgers, invoices, receipts and otheraccountable forms deemed relevant by the Corporation; and,

j. Other mechanism or analogous process, as may be determined by theCorporation that would be necessary to conduct a complete audit andinvestigation.

Source: National Health Insurance Act of 2013Retrieved from http://www.philhealth.gov.ph/about_us/irr_nhia2013.pdf

1.1.4.2 Labor Management

(1) Labor Code of the Philippines

Presidential Order No. 442, Revised Labor Code of the Philippines Chapter II regulatesoccupational health and safety. Article 162 specifically provides Safety and HealthStandards as follows:“The Secretary of Labor and Employment shall, by appropriate orders, set and enforcemandatory occupational safety and health standards to eliminate or reduce occupationalsafety and health hazards in all workplaces and institute new, and update existing, programsto ensure safe and healthful working conditions in all places of employment.”

(2) Occupational Safety and Health Standards

Based on the Revised Labor Code Article 162, Occupational Safety and Health Standardsare enacted. Rule 1960 provides as an obligation of employers to introduce healthexaminations to employees as occupational health services which is described as follows:

Table 1.1.31 Obligation of Employers under Rule 1960 of Occupational Safety and

Health Standards

RelatedRules

Contents

1961 (1) Every employer shall establish in his place of employment occupational


58

GeneralProvisions

health services in accordance with the regulation and guidelines provided forunder this rule.

（omitted）

1961.01Coverage

(1) This Rule shall apply to all establishments whether for profit or not,including the Government and any of its political subdivisions andgovernment-owned or controlled corporations.

（omitted）

1966 Occupational Health Program

1966.01 The employer shall organize and maintain an occupational health program toachieve the following objective:

（omitted）

1966.02 The Health Program shall include the following activities:

(1) omitted

(2) Health Examinations:a) Entrance;b) Periodic;c) Special examination;d) Transfer examination;e) Separation examination.

（omitted）

1967 Physical Examination:

(1) All workers, irrespective of age and sex, shall undergo physicalexamination:a. before entering employment for the first time;b. periodically, or at such intervals as may be necessary on account of the

conditions or risks involved in the work;c. when transferred or separated from employment; andd. when injured or ill.

(2) All examinations shall:a. be complete and thorough;b. be rendered free of charge to the workers; andc. include X-ray or special laboratory examinations when necessary due to

the peculiar nature of the employment.


59

(omitted)

1967.01 Pre-employment/Pre-placement Physical Examinations:

(1) Pre-employment Physical examination shall be conducted:a. to determine the physical condition of the prospective employee at the

time of hiring: andb. to prevent the placement of a worker on a job where, through some

physical or mental defects, he may be dangerous to his fellow workersor to property.

(2) Pre-employment physical examination shall:a. be a general clinical examination including special laboratory

examinations when necessary due to the peculiar nature of the workersprospective employment;

b. include chest x-ray examinations. Under the following circumstances,x-ray examinations be rendered free of charge.

(omitted)

1967.03 Periodic Annual Medical Examinations:

Periodic annual medical examinations shall be conducted in order to follow-upprevious findings, to allow early detection of occupational andnon-occupational diseases, and determine the effect of exposure of employeesto health hazards. These examinations:(1) Shall be as complete and as thorough as the pre-employment examinations

and include general clinical examinations.(2) Shall include all special examinations and/or investigations deemed

necessary for the diagnosis of these diseases which will be free of chargein case the workers are exposed to occupational health hazards.

(3) Shall include, whenever feasible, a chest x-ray examination at least once ayear which shall be rendered free of charge to the workers.

(omitted)

Source: Occupational Safety and Health Standards (As Amended, 1989)Retrieved fromhttp://www.oshc.dole.gov.ph/UserFiles/oshc2010/file/OSH_Standards_Amended_1989_Latest.pdf

1.1.4.3 Law on Company

(1) Types of companies

There are 3 major types of domestic companies: Single Proprietorship, Partnership and


60

Corporation.

Table 1.1.32 Types of companies in the Philippines

Type Description

SoleProprietorship

Sole Proprietorship is a business structure owned by an individual whohas full control/authority of its own and owns all the assets, personallyowes and answers all liabilities or suffers all losses but enjoys all theprofits to the exclusion of others.

Partnership Under the Civil Code of the Philippines, a partnership is treated asjuridical person, having a separate legal personality from that of itsmembers. Partnerships may either be general partnerships, where thepartners have unlimited liability for the debts and obligation of thepartnership, or limited partnerships, where one or more general partnershave unlimited liability and the limited partners have liability only up tothe amount of their capital contributions. It consists of two (2) or morepartners. A partnership with more than three thousand pesos (3,000.00)capital must register with Securities and Exchange Commission (SEC).

Corporation Corporations are juridical persons established under the CorporationCode and regulated by the Securities and Exchange Commission with apersonality separate and distinct from that of its stockholders. Theliability of the shareholders of a corporation is limited to the amount oftheir share capital. It consists of at least five (5) to fifteen (15)incorporators each of whom must hold at least one share and half of theincorporators must be residents of the Philippines. It must be registeredwith the Securities and Exchange Commission (SEC). Minimum paid upcapital: five thousand pesos (5,000.00).

A corporation can either be stock or non-stock company regardless ofnationality. Such company, if 60% Filipino-40% foreign-owned, isconsidered a Filipino corporation; If more than 40% foreign-owned, it isconsidered a foreign-owned corporation.

Source: Investphilippines Website http://investphilippines.gov.ph/setting-up/types-of-business-enterprises/

(2) Procedure for the establishment of a company

Procedures for starting a business in the Philippines are described in 2.2.4.1.


61

1.1.4.4 Laws on Foreign Investments

(1) Restriction on Investments

The Foreign Investment Act (Republic Act No. 7042) prescribes the Foreign InvestmentsNegative List which lists industries and business activities where foreign investments areallowed, and is composed of two lists;

• List A - consists of areas of activities reserved to Philippine nationals where foreignequity participation in any domestic or export enterprise engaged in any activity listedtherein shall be limited as prescribed by the Constitution and other specific laws; and

• List B - consists of areas of activities where foreign ownership is limited pursuant to lawsuch as defense or law enforcement-related activities, which have negative implications onpublic health and morals, and small and medium-scale enterprises.

(2) Incentive for foreign investor

The Omnibus Investment Code (Executive Order No. 226) prescribes incentives and rightsof foreign investors. The requirements to receive preferential treatment are as follows:

• The industry and/or project are included in the “Investments Priorities Plan” which ispublished by the Board of Investment annually.

• To be approved by the Board of Investment.

The incentive is the exemption of corporate tax for 4-8 years, etc.

(3) Land ownership by foreign investors

Under the Constitution of the Philippines (1987), land owner is generally limited to Filipinocitizens and corporations or partnerships of which at least 60% shares are owned by theFilipino citizen.

Under Investor’s Lease Act (RA No. 7652), a foreign investor is allowed to leasecommercial lands in the Philippines for a maximum of 75 years. Under this law, any foreigninvestor infusing capital into the country can lease private lands, in observance ofPhilippine laws and the following:

1. Lease contract shall first be for 50 years, renewable only once for another 25 years.

2. Leased area will be used solely for investment.

3. Lease contract will conform with the Comprehensive Agrarian Reform Law and theLocal Government Code.


62

1.1.4.5 Law on borrowings, foreign exchange and remittance

Foreign borrowings require prior approval of and/or registration with the Bangko Sentral ngPilipinas in order that repayment of principal and remittance of interest, distribution ofdividends or benefits and divestment of capital may be distributed by using foreignexchange purchased from the Philippine commercial banks.

1.1.4.6 Tax regulation

(1) Corporate income tax

- Tax rate

The basic rate is 30%.

- Minimum Corporate Income Tax

A minimum corporate income tax of 2% of the gross income as of the end of the taxableyear is imposed on a corporation which is subject to normal income tax of 30% on thefourth taxable year when the minimum income tax is greater than the normal income tax forthe taxable year.

(2) Withholding tax

The Philippines and Japan have a tax treaty. Based on the treaty, the rates for distribution ofmoney from the Philippines to Japan are as follows:

- Repayment of interest: 10%

- Distribution of dividend: 10% (more than 10% ownership), 15% (less than 10%ownership)

- Distribution of royalty: 10-15%

(3) Value added tax

Value added tax is 12%.

(4) Real property tax (RPT)

RPT is computed in the following way:

RPT = RPT Rate x Assessed Value

Maximum RPT rates are different from region:

Taxing Authority RPT Rate

City and Municipality in Metro Manila 2%

Province 1%


63

Assessed value is computed in the following way:

Assessed Value = Fair Market Value x Assessment Level

Fair Market Value is defined as follows:

“Market value — is defined as "the highest price estimated in terms of money which the

property will buy if exposed for sale in the open market allowing a reasonable time to find a

purchaser who buys with knowledge of all the uses to which it is adapted and for which it is

capable of being used." It is also referred to as “the price which a willing seller would sell

and willing buyer would buy, neither being under abnormal pressure.”

Sec.3(n) of “The Real Property Tax Code of Presidential Decree No. 464”

Assessment Level for hospitals is defined as follows:

“Special Classes — The assessment level for all lands, buildings and other improvement

thereon, actually, directly and exclusively used for educational, cultural or scientific

purposes, as well as hospitals not owned and operated by the government or by any of its

instrumentalities shall be fifteen per cent of the market value of such property and for those

exclusively used for recreational purposes, thirty per cent of their market value.”

Sec.18(d) of “The Real Property Tax Code of Presidential Decree No. 464”33

(5) Customs

The rates are different for products. Imported medical equipment are imposed a 3% tariffduty and a 10% value-added tax (VAT).34

33 http://www.chanrobles.com/presidentialdecreeno1812.htm#.VK44prVfmBo34 http://www.ita.doc.gov/td/health/philippines_meddev05.pdf


64

Chapter 1-2 Analysis of market conditions

1.2.1 Trends in the relevant policies, plans, budget/source of funds

1.2.1.1 Fiscal affairs

The National Government (NG) recorded a PHP 164.1 billion budget deficit for 2013,which is within the PHP 238 billion deficit ceiling for the period. The fiscal gap narrowedby 32% or PHP 78.8 billion in contrast with 2012 levels after improved revenue collectionsand sustained prudence in expenditures. The fiscal deficit fell to 1.4% of GDP, lower thanboth the 2% target and the 2.3% recorded in the previous year. Meanwhile, NG incurred aPHP 52.6 billion deficit for December 2013.

Revenue collections reached to PHP 1,716.1 billion. Full-year collections grew 12% or PHP181.2 billion, with tax effort of 13.3% in 2012 and 12.9% in 2013. Tax revenues amountedto PHP 1,535.3 billion, making up 89% of the total, while non-tax sources contributed PHP180 billion. Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC) collectionsfor 2013 stood at PHP 1,216.7 billion and PHP 304.6 billion, reflecting 15% and 5%year-on-year revenue growth, respectively. BIR and BoC revenue reached PHP 96.7 billionand PHP 23.8 billion, respectively, in December. Meanwhile, Bureau of the Treasury (BTr)and other government offices contributed PHP 81.0 billion and PHP 113.9 billion for theyear, respectively. Collections from other offices grew 10% year-on-year, while BTRincome reflected a 4% decline due to lower remittance of dividends from shares of stocks.

Table 1.2.1 Trend in annual revenue of the Government in past 5 years

Source of Income

(in Million PHP)2009 2010 2011 2012 2013

I. Tax Revenues 981,631 1,093,643 1,202,066 1,361,081 1,535,698

Bureau of Internal Revenue 750,287 822,623 924,146 1,057,916 1,216,661

Bureau of Customs 220,307 259,241 265,108 289,866 304,925

Other Offices 11,037 11,779 12,812 13,299 14,112

II. Non-Tax Revenues 141,389 113,877 157,621 173,752 180,074

BTr Income 69,912 54,315 75,236 84,080 81,013

Fees and Other Charges 19,253 22,820 26,048 27,793 30,541

Privatization 1,390 914 930 8,348 2,936

Others 50,834 35,828 55,407 53,531 65,584

III. Grants 191 406 255 99 321

Total Revenue 1,123,211 1,207,926 1,359,942 1,534,932 1,716,093Source: Adapted from Bureau of the Treasury (2013)


65

NG disbursements in 2013 totaled to PHP 1, 880.2 billion. Expenditures accelerated by 6%or PHP 102.4 billion in 2013 despite a 16% year-on-year decline in disbursements forDecember. Of the total expenditures, interest payments (IP) amounted to PHP 323.4 billionwhich is within the PHP 332.2 billion program for the period. The Government realizedPHP 8.8 billion in IP savings versus program notwithstanding the inclusion ofunprogrammed interest payments on Retail Treasury Bonds issued in 2012. Broken down,domestic IP amounted to PHP 222.3 billion in 2013, up 10% year-on-year as theGovernment concentrated on domestic sources of financing to take advantage of substantialdomestic liquidity and minimize forex risk. On the other hand, IP on foreign debt dropped9% in 2013, settling at PHP 101.1 billion as an effect of the financing program. Total IP for2013 is down to 18.8% of total revenues from 20.4% in 2012, indicating the country’simproved capacity to service its debt. Likewise, IP is down to 17.2% of expenditures for theyear from 17.6% in the previous year, freeing up space for productive Governmentspending.

Netting out interest payments from expenditures, NG managed a PHP 159.4 billion primarysurplus for 2013, surpassing the Government’s target of PHP 94.2 billion and improvingupon the PHP 70.0 billion primary surplus in 2012. Government spending by sectorshowing the trends from 2012 to 2014 is detailed in Table 1.2.2, while top ten budgetallocations per department in 2013 can be seen in Table 1.2.3. The bulk of the governmentis primarily used for Social and Economic Services, while Debt Burden and Defensereceived the least.

Table 1.2.2 Trend in Annual Budget of the Government by Sector

Sector 2011 2012 2013 2014Amount(in billionpesos)

Percentage Amount(inbillionpesos)



Percentage

Social Services 521,445 31.99 567.9 31.3 698.8 34.8 842.8 37.2

Economic Services 361,926 22.20 439.5 24.2 511.1 25.5 590.3 26.2

General Public Services 288,090 17.27 338.1 18.6 346.1 17.3 364.5 16.1

Debt Burden 357,090 21.91 356.1 19.6 333.9 16.6 377.6 16.6

Defense 101,449 6.22 114.4 6.3 89.7 4.5 92.9 4.1

Source: Adapted from Department of Budget and Management (DBM) (2011-2014)

The different budgetary sectors are Social Services, Economic Services, General PublicServices, Defense, and Debt Burden. Social Services represent government spending to


66

improve the living conditions of citizens, particularly the poor, through education, health,social security, and others. Economic Services are government expenditures that areintended to support economic development, including agriculture, transport, infrastructure,tourism, and others. General Public Services are expenditures for general administration(such as fiscal management, foreign affairs, lawmaking, etc.), and public order and safety.Defense refers to expenditures that support the general effort to ensure national security,stability, and peace. Debt Burden includes interest payments on national government’sdomestic and foreign debt, as well as net lending to government corporations for their debtthat are guaranteed by the national government. (Management)

Table 1.2.3 2013 Budget of the Government by Sector (Top 10 Departments)

Department Acronym Budget (in Billion pesos)

Department of Education DepEd 292.7

Department of Public Works and Highways DPWH 152.9

Department of National Defense DND 121.6

Department of Interior and Local Government DILG 121.1

Department of Agriculture DA 74.1

Department of Health DOH 56.8

Department of Social Welfare and Development DSWD 56.2

Department of Transportation and

Communications

DOTC37.1

Department of Finance DOF 33.2

Department of Environment and Natural

Resources

DENR23.7

Source: Adapted from Department of Budget and Management (DBM) (2012-2014)

In 2013, the Philippines' long history of junk-debt ended. The country got investment-gradestatus first from Fitch Ratings, second by S&P and then by Moody's Investors Service.Fitch Ratings has upgraded the credit rating of foreign and local bond ratings in March of2013 to “BBB-" and "BBB," respectively. Standard & Poor's Ratings Services gave along-term sovereign credit rating status of "BB+" from "BBB-“ in May of 2013 whileMoody’s Investors Service, known to be the most conservative among the three majorcredit watchdogs, also raised its ratings in October of 2013 to Ba1 from Baa3.

The Debt-to-GDP ratio of the Philippines also continues to improve. In a recent article by


67

the Philippine Star35, one of the country’s leading news publications, it cited that thegovernment’s debt in proportion to the size of the economy has improved due to moreefficient spending. As of March 2014, government debt was at PHP 4.49 trillion or 38.1%of the gross domestic product of the country. This is down from 38.5% the same time lastyear. The table below shows the consolidated general government debt from 2006 to 2012.

Table 1.2.4 Annual Debt-to GDP Ratio

Department 2006 2007 2008 2009 2010 2011 2012

Domestic 24.5% 22.3% 20.8% 20.4% 21.3% 20.6% 22.7%

Foreign 27.2% 22.0% 23.4% 24.0% 22.2% 20.8% 17.9%

Total Consolidated

Government Debt51.6% 44.2% 44.2% 44.3% 43.5% 41.4% 40.6%

Source: Adapted from Department of Finance

1.2.1.2 DOH Major Programs and Projects

(1) DOH Major Programs and Projects Classified According to the Five KRA’s of the SocialContract and Kalusugan Pangkalahatan (Universal Health Care)

Inequality is a pervasive problem in the Philippines, including in the health sector. Toaddress the gaps of inequality, the Aquino Health Agenda (AHA), through AdministrativeOrder No. 2010-0036 was implemented. This contained the Kalusugan Pangkalahatan (KP)strategy of the DOH. The implementation of KP shall be directed towards the achievementof the health system goals of financial risk protection, better health outcomes, andresponsive health system. KP is a means to fulfill the social contract of President BenignoAqunio with the Filipino people36 .In 2011 Benigno Aquino, the President of the Philippines, released Executive Order No. 43,Pursuing our Social Contract with the Filipino people through the organization of the

Cabinet Clusters. This established Key Result Areas (KRA’s) for the different governmentdepartments. The Key Result Areas for the Department of Health (DOH) are (1)Transparent Accountable and Participatory Governance, and (2) Poverty Reduction andEmpowerment of the Poor and Vulnerable. These KRA’s determine the major programs andprojects of the DOH, as illustrated in the tables below (DOH, n.d.).

35 Dela Pena, Z. (2014, September 24). Debt-to-GDP ratio continues to improve. Retrieved October 2014, from Philstar.com:

http://www.philstar.com/business/2014/09/24/1372404/debt-gdp-ratio-continues-improve

36 Department of Health (2012). National Objectives of Health 2011-2016. Retrieved October 10, 2014, from

http://www.doh.gov.ph/content/national-objectives-health-2011-2016.html


68

Table 1.2.5 DOH Programs According to the Five KRA’s of the Social Contract and the

Kalusugan Pangkalahatan (Universal Health Care)

KRA 1: Transparent Accountable and Participatory GovernanceISO Certification The DOH is the first government agency in the country certified to have a

department-wide ISO 9001. It aims to institutionalize the quality managementsystem in the Department.

Kalusugan PangkalahatanMonitoring and Evaluation(Universal Health Care)

The KP M&E will ensure that progress and performance against KP goals andobjectives are clearly defined on the basis of valid and reliable data. It shallassess and report program progress, effectiveness and impact to promoteinformed decision making. The KP M&E is composed of the followingsystems: KP dashboard, Cabinet Assistance System (CAS), LGU scorecard,CHD scorecard, donor scorecard, Performance Governance System,Expenditure Tracking System, among others.

KRA 2: Poverty reduction and empowerment of the poor and vulnerableKalusugan Pangkalahatan Strategic Thrust 1: Financial Risk ProtectionNational Health InsuranceProgram (NHIP)

Aims to protect all Filipinos, especially the poor, from the financial burden ofaccessing/availing preventive and curative healthcare services. It was establishto serve as the means to help the people pay for health services; and prioritizeand accelerate the provision of health service to all Filipinos, especially thesegment of the population who cannot afford these services.

Kalusugan Pangkalahatan Strategic Thrust 2: Improve Access to Quality Health Facilities and ServicesHealth Facility EnhancementProgram (HFEP)

Aims to improve access of all Filipinos to quality health facilities by buildingnew or upgrading the capacity of existing public health facilities such asbarangay health stations, rural health units/ health centers, LGU and DOHhospitals to help attain the public health- related Millennium DevelopmentGoals, attend to traumatic injuries and other types of emergencies, and managenon- communicable diseases and their complications.

DOH Complete Treatment Pack(ComPack) Program

A medicines access program designed to reach the poorest of the poor withcomplete treatment regimens for the top most common diseases in the country.

Human Resource for HealthDeployment –

Physicians, nurses, and midwives are deployed in 4th to 6th classmunicipalities or identified Conditional Cash Transfer (CCT) areas

Doctors to the Barrios; RNHealsand Rural Health Midwife

With lacking or with limited numbers of HRH that can deliver health services.They are deployed in these areas so that health services can be more efficientlyand effectively delivered, e.g. contribute better maternal and child health careand therefore attain the Millennium Development Goals (MDGs).

Community Health Team (CHTs) The community health team is composed of the barangay health workers,community volunteers, barangay officials and health providers who willcommunicate directly with the poor families to ensure early identification ofhealth problems of family members, effective access to accredited healthproviders and facilities, and timely utilization of needed health services toimprove health outcomes. The CHTs are crucial to break the barriers limitingthe access by the poorest households to quality health care and services.

National Telehealth ServiceProgram

Help in improving access to health services through the use of ICT especiallyin Geographically Isolated and Disadvantaged Areas

Kalusugan Pangkalahatan Strategic Thrust 3: Attainment of Health-related MDGsExpanded Program onImmunization

To reduce mortality and morbidity among children 0-11 months against thevaccine preventable diseases. Specific goals includethe following: (1) Sustain the polio-free status of the country; (2) eliminatemeasles; (3) eliminate maternal and neonatal tetanus and (3) control hepatitis binfections, diphtheria, pertussis, extrapulmonary tuberculosis, meningitis/invasive bacterial diseases and severe diarrhea caused by the rotavirus.


69

Adolescent Health Program Aims to promote the total health and well-being of young people throughyouth-friendly comprehensive health care and services on multiplelevels—national, regional, provincial/city, and municipal.

Women’s Health and SafeMotherhood Project

Contribute to the national goal of improving women’s health by:1.Demonstrating in selected sites a sustainable, cost-effective model ofdelivering health services access of disadvantaged women to acceptable andhigh quality reproductive health services and enables them to safely attaintheir desired number of children.2. Establishing the core knowledge base and support systems that can facilitatecountrywide replication of project experience as part of mainstreamapproaches to reproductive health care within the Kalusugan Pangkalahatanframework.

Micronutrient MalnutritionProgram

Aims to contribute to the reduction of disparities related to nutrition through afocus on population groups and areas highly affected or at-risk to malnutritionand micronutrient deficiencies and to provide vitamin A, iron & iodinesupplements to treat or prevent specific micron nutrient deficiencies.

Family Planning Program A national mandated priority public health program to attain the country'snational health development: a health intervention program and an importanttool for the improvement of the health and welfare of mothers, children andother members of the family. It also provides information and services for thecouples of reproductive age to plan their family according to their beliefs andcircumstances through legally and medically acceptable family planningmethods.

National TB Control Program The program aims to reduce morbidity and mortality from tuberculosis byscaling-up and sustaining coverage of DOTS implementation, ensuringprovision of quality TB Services and reducing out-of-pocket expenses relatedto TB care.

National HIV, AIDS and STIPrevention and Control Program

Aims to prevent the further spread of HIV infection and reduce the impact ofthe disease on individuals, families, sectors and communities by improving thecoverage and quality of prevention programs for persons at most risk,vulnerable and living with HIV

Malaria Control Program Aims to significantly reduce malaria burden so that it will no longer affect thesocio-economic development of individuals and families in endemic areas.

National Dengue Control Program The NDPCP is directed towards community-based dengue prevention andcontrol in endemic areas.

National Rabies Prevention andControl Program

The Rabies Program is jointly implemented by the DOH with the Departmentof Agriculture (lead agency and the responsible for canine immunization),Department of Education and the Department of Interior and LocalGovernment (DILG). It aims to eliminate rabies in the Philippines by 2020.

National Filariasis ControlProgram

Aims to eliminate filariasis as a public health problem through comprehensiveapproach and universal access to quality health services

Schistosomiasis Control Program Area-based schistosomiasis case-finding and treatment program concurrentwith vector control and environmental engineering measures.

Tobacco Control Program Aims to reduce the prevalence of tobacco use and decrease the overall illeffects of tobacco through policies and legislation on tobacco control.

Healthy Lifestyle Program It aims to inform and encourage Filipinos from all walks of life to practice ahealthy lifestyle by making a personal commitment to physical activity, propernutrition, and the prevention or cessation of smoking and alcoholconsumption.

Cancer Prevention and ControlProgram

Aims to develop a comprehensive approach and strategies to increaseawareness, information and continuing education of health personnel,high-risk individuals and patients.


70

Chronic Respiratory DiseasesPrevention and Control Program

Cardiovascular Disease PreventionandControl Program

Diabetes Mellitus Prevention andControl Program

Aims to develop a comprehensive approach and strategies to increaseawareness, information and continuing education of health personnel,high-risk individuals and patients.It utilizes early detection through the risk assessment at the primary,secondary, and tertiary levels of health care with the appropriatemedical/therapeutic management.

Health Development Program forOlder Persons

The program intends to promote and improve the quality of life of olderpersons through the establishment and provision of basic health services forolder persons, formulation of policies and guidelines pertaining to olderpersons, provision of information and health education to the public, provisionof basic and essential training of manpower dedicated to older persons and, theconduct of basic and applied researches.

Persons with Disabilities Aims to reduce the prevalence of all types of disabilities; and Promote, andprotect the human rights and dignity of PWDs and their caregivers.

Environmental Health Program The primary mission of the program is to lead and synchronize all efforts inenvironmental health towards a healthy and safe community. Its primary goalis to reduce human exposures to various environmental hazards therebyreducing incidence of water and sanitation related diseases.

Violence and Injury PreventionProgram

This program is designed to reduce disability and death due to violence andinjuries in the following areas: road traffic injuries, burns andfireworks-related injuries, drowning, falls, sports and recreational injuries,interpersonal violence-related injuries, bullying, animal bites and stings,self-harm, occupational or work- related injuries, poisoning and drug toxicity.

Occupational Health Program The primary mission of the program is to lead and synchronize all efforts inoccupational health towards a healthy and safe working environment. Itsprimary goal is to reduce the incidence of work- related diseases and injuriesdue to poor working condition

Event-based Surveillance andResponse (ESR)

This is an organized and rapid capture of information about events that are apotential risk to public health including those related to the occurrence of adisease in humans and events with potential risk-exposures to humans. It isdesigned to complement the existing indicator-based surveillance.

In the revised 2005 International Health Regulations (IHR), there was a call toits Member States to designate a NationalFocal Point for the IHR. The members were also encouraged to maintain andstrengthen their core capacities for surveillance and response. In response toIHR, the Secretary of Health through Administrative Order 2007-002designated the National Epidemiology Center (NEC) as the InternationalHealth Regulations Focal Point for the Philippines.

Surveillance in Post ExtremeEmergenciesand Disasters (SPEED)

The project is developed as an early warning system designed to monitordiseases (both communicable and non-communicable), and health trends, thatcan be harnessed as a powerful tool by health emergency managers in gettingvital information for appropriate and timely response during emergencies anddisasters.

Source: Adapted from Major Programs and Projects.Retrieved from http://www.doh.gov.ph/Major%20_Programs%20and%20Projects.html.


71

1.2.1.3 Health Sector Budget and its Source of Funds

The budget and expenditure trends for the health sector during the years 2005-2011 areindicated in the two tables below.

Table 1.2.6 Health Expenditure by Source of Fund, 2005-2011 (in million pesos)

Source of Funds 2005 2006 2007 2008 2009 2010 2011

Government 58,474 57,475 74,036 74,875 88,722 101,378 116,433

National

Government30,416 27,001 32,749 36,554 36,949 43,375 53,069

Local

Government28,058 30,475 41,288 38,320 51,773 58,003 63,364

Social Insurance 19,360 19,098 19,972 21,434 27,897 33,925 39,126

National Health

Insurance

Program

19,270 19,005 19,838 21,345 27,791 33,799 39,022

Employees'

Compensation90 93 134 88 107 126 104

Private Sources 118,293 135,376 173,987 202,054 217,865 239,139 272,009

Private

Out-of-Pocket97,562 113,087 147,873 171,116 182,370 199,983 227,215

Private

Insurance4,112 3,924 4,175 5,108 6,083 6,401 7,222

Health

Maintenance

Organizations

8,853 10,097 13,123 15,638 18,199 21,170 24,570

Employer-Based

Plans/Private

Establishments

5,699 5,813 5,996 7,043 7,809 7,937 9,297

Private Schools 2,068 2,455 2,820 3,148 3,404 3,649 3,706

Rest of the

World2,271 4,463 933 3,682 7,681 6,384 3,478

Grants 2,271 4,463 933 3,682 7,681 6,384 3,478

ALL SOURCES 198,398 216,413 268,928 302,043 342,164 380,826 431,047

Source: Adapted from Budget Facts and Figures, by the Legislative Budget Research and Monitoring Office.Retrieved from https://www.senate.gov.ph/publications/LBRMO%202013-02%20Budget%20Facts.pdf.


72

Table 1.2.7 Health Sector Budget Allocation Breakdown per year

Source: Adapted from Budget Facts and Figures, by the Legislative Budget Research and Monitoring Office.Retrieved from https://www.senate.gov.ph/publications/LBRMO%202013-02%20Budget%20Facts.pdf.

According to a publication by the National Statistical Coordination Board, titled“Philippine National Health Accounts,” total health expenditure has increased graduallyover the years. The majority of total health spending has been shouldered by private sources,made up of accounts from private out-of-pocket, private establishments, private schools,private insurance and health maintenance organizations (HMOs).

Although most of the country’s private health expenditure came directly from the pocketsof the public, most Filipinos are not financially equipped to address their health concerns.Given the increased awareness on various medical issues, the rate of availing medicalservices to alleviate these issues loses by comparison. The increasing costs of receivingmedical attention do not help improve the situation, either.


73

1.2.1.4 Budget Reservation for Achieving Universal Healthcare

In December 2012, Republic Act No. 10351, An Act Restructuring the Excise Tax onAlcohol and Tobacco Products, was signed by President Aquino and took effect in January2013.

The Act focused on the following two points: 1) the ratio of excise tax to the total taxrevenue fell 6.2 points, from 14.4% in 2002 to 8.2% in 2010, and within the 6.2 pointdecrease, 1.9 points were from the decline for alcohol and tobacco, from 8.4% to 6.5%; 2)more men and the young smoke than women and the old, and the poor smoke more andtake alcohol more than the rest of the income class.

Under the Act, the Philippine Government is expected to generate additional 34 billionpesos of tax revenue, of which 15% is allocated to the safety nets for tobacco farmers, and80% of the remaining balance of the incremental revenue shall be allocated for theuniversal health care under the National Health Insurance Program, and 20% shall beallocated nationwide for medical assistance and health enhancement facilities program(Section 8(C)).

As a result, Department of Health ranked up from 6th in 2013 to 5th in 2014 budgetallocation, passing Department of Agriculture.

Table 1.2.8 Budget Allocation by Department（2013-2014）

Department 2013 2014 Difference

Rank Amount Rank Amount Amount Increase(%)

Department of Education 1 293.400 1 336.900 43.500 14.83

Department of PublicWorks and Highways

2 152.400 2 213.500 61.100 40.09

Department of Interior andLocal Government

3 121.800 3 135.400 13.600 11.17

Department of NationalDefense

4 121.600 4 123.100 1.500 1.23

Department of Health 6 59.900 5 87.100 27.200 45.41

Department of Agriculture 5 75.000 6 80.700 5.700 7.60

Source: Budget Facts and Figures, September 2013, by the Legislative Budget Research and Monitoring Office.

Retrieved from https://www.senate.gov.ph/publications/LBRMO%200913%20Budget%20Facts.pdf


74

1.2.2 Infrastructures

Since 1995, the Department of Health has been working on the improvement of hospitalsystem by crafting the Philippine Hospital Development Plan (PHDP) which was thenexpanded and renamed the Philippine Health Facility Enhancement Program (HFEP) in2008. In 2012, as a framework to enable physical improvements of government healthcarefacilities, DOH issued Administrative Order 4 Series of 2012 as a commitment to engage inmore public–private partnerships (PPPs). With this document, DOH aimed to prioritizePPPs that would support the universal healthcare goals and other DOH-set priority areas.Through the DOH Center of Excellence for Public–Private Partnerships in Health, DOHstarted various partnerships with the private sector, such as the Modernization of thePhilippine Orthopedic Center etc. Below is the current list of Public-Private Partnership(PPP) projects and its status as of October, 2014.

Table 1.2.9 PPP projects in healthcare sector

Project NameEstimatedcost (PHP)

AgencyPrivate

ProponentLocation Status

Philippine Orthopedic CenterModernization(construction of a 700-bed capacitysuper-specialty tertiary orthopedichospital)

5.69 Bn DOH Megawide-World CitiConsortium

Quezoncity Contract awarded,

target completiondate Jan 2017

Trimedical Complex(The Tri-Medical Complex willinvolve the modernization andintegration of the three medicalcenters proposed to be located at theTayuman Compound of DOH)

TBD DOH TBD Manila

Ongoingprocurement ofConsultants

Vicente Sotto Memorial MedicalCenter Modernization (Upgradingthe facilities and expanding the bedcapacity)

TBD DOH TBD CebuCity

Ongoingprocurement ofConsultants

Rehabilitation of National Centerfor Mental Health (the relocationand modernization of the NationalCenter for Mental Health)

TBD DOH TBD ManilaUnderconceptualization/development

PhilHealth IT Project(computerization of PhilHealth)

TBD PhilHealth/ DOH

TBD TBD Underconceptualization/development

Source: Adapted from List of PPP Projects by Public-Private Partnership Center

Retrieved from Public-Private Partnership Center – Status of PPP Projects as of 27 Aug 2014.pdf

1.2.3 Projects position within the partner country’s policy such as its development plan

As mentioned earier, the Philippines developed the ‘Philippine Development Plan2011-2016’, whose aim includes the achievement of universal healthcare. The governmenthas taken various actions such as the enactment of the Sin Tax Law and implementation ofHealth Facility Enhancement Program (HFEP). However, the progress is still slow against


75

the remaining challenges such as high population growth, disparity in health servicedelivery and utilization, fragmentation in health financing and service delivery, etc. Thecountry’s health system remains underfunded, as DoH budget aiming for upgrading healthfacilities is not fully admitted. Therefore, the government still needs to largely focus on thepoor, while the middle-class population is rapidly growing. Under these circumstances, theFilipino Government recognizes the private sector as a partner especially “in pursuingdevelopment objectives” as declared in the 1987 Constitution. The construction of hospitalsby private sector has been also promoted since the improvement of social infrastructure isone of the most urgent issues raised in the Development Plan.

1.2.4 Foreign Initiatives

According to the WHO Country Cooperation Strategy for the Philippines (2011–2016),ODA for health from more than 10 development partners, consisting of multilateral banks,bilateral agencies and the United Nations system reached US$ 747.8 million. ODA wasused for the following projects in support of MTPDP (Medium Term PhilippineDevelopment Plan) 2005-2010. The table below is the list of the past and ongoing projectsconducted by foreign development partners.

Table 1.2.10 Foreign funded health sector projects (in PHP)

Agency Project

ADB The Health Sector Development Project

World BankNational sector support for Health Reform Project and theSecond Women’s Health and Safe Motherhood Project

European Union The health sector policy support

KOICAImproving Disease Prevention and Control in Cavite throughthe Construction of a Public Health Collaboration Center;Korea-Philippine Friendship Hospital (2010-2012, Cavite)

KOICADevelopment of the Lung Center of the Philippines as theNational Referral Center for Multi DrugResistant-Tuberculosis (MDR-TB) (2008-2011, Quezon city)

World bankPilot interventions that improve the health status,particularly maternal and reproductive health, of poorpopulations (2011-2015, World Bank)

The Global Fund The Global Fund to Fight AIDS, Tuberculosis and Malaria

MDG-FundMDG-F 2030: Ensuring Food Security and Nutrition forChildren 0-24 months in the Philippines

The United Nations JointProgramme

on Reducing Maternal and Neonatal Mortality (supported bythe Australian Agency for International Development,AusAID)

Bloomberg The tobacco free initiativesUNDP Health care waste managementEuropean Union Mindanao Health and Population Sector ProgrammeKFW, USAID, GIZ, JICA,AECID and KOICA

Health Sector Reform Project in selected sites by

Source: KOICA website and World Bank website

The Republic of the Philippines Preparatory Survey on ... · The Republic of the Philippines The...

Documents

Transcript of The Republic of the Philippines Preparatory Survey on ... · The Republic of the Philippines The...